The genius invention of the 21st Century is Bitcoin, not because it is a Peer 2 Peer network or distributed ledger technology. No, it is because Bitcoin gave us the first real computer science breakthrough in decades, maybe ever.
The real genius is programmable money - cryptocurrencies. Each time you download the Bitcoin open source code or forked derivations of it, including Ethereum, you get your own altcoin. Most importantly is the opportunity to programme and connect with the world in new and exciting ways.
Today there are at least 800 cryptocurrencies, and within five years there may be 5,000 to 10,000 in use. There are two principal uses for cryptocurrencies, or three depending on whether you include Initial Coin Offerings or ICOs used for crypto-crowdfunding.
The first is the creation of an exchange traded digital currency like Bitcoin, Ripple, Litecoin or Dogecoin that we created with a trading purpose for speculation and accumulation. Second is a token for exchanging and recording value.
Ether, or ETC/ETH, is a byproduct of Ethereum forked code and its traded currency. Its primary purpose was to build a world computer, a state machine where miners as transaction processors can be rewarded for the energy, investment and effort.
Others such as Zcash took the properties of Bitcoin and extended the anonymity, where the addresses at each end of the transaction and the payload -amount - remain hidden, using a rather fabulous zero knowledge proof algorithm that is again considered one of the great innovations of our time.
Internet of Value
The Blockchain protocol sits atop the Internet at the TCP-IP layer, delivering new options to trade, exchange and store value in new ways, and it is why many call it the upgrade we have been waiting for to become, as Don Tapscott famously labeled in Blockchain Revolution, the “Internet of Value.”
Smart entrepreneurs and their talented coders are picking off industries to go after with a new vision of trade and commerce, where the relationship between parties can look and feel entirely different and where assets and values can be Tokenised. This is where the magic happens, where the attributes of the token - as a measure of value - can be programmed to have a conscience, to deliver groundbreaking impact that is re-inventing industries.
The properties of each new altcoin can be written into the core design of the underlying Blockchain operating or industry model where the characteristics of the Proof of Work or Proof of Stake can reflect the desired output. The scarcity, the initial value, the mining effort required and the underlying reward as a hybrid can deliver the fair and open trade of value exchanged for things, including the intellectual property of music, patents, designs, works of art and other precious things – metals, jewelry and assets.
Altcoins can become a token for security, for greasing the supply chain and for governance purposes, to manage risk, reward and incentivize customers and partners for loyalty. They can become a carrier of attributes to support identity and for building reputations.
Thus they can be used in a Machine 2 Machine (M2M) world where devices, systems and things can trade using their specific altcoins, following instructions from smart contracts that will become part of a programmable world.