TY - JOUR AU - Burnie, Andrew AU - Burnie, James AU - Henderson, Andrew PY - 2018/07/27 Y2 - 2024/03/29 TI - Developing a Cryptocurrency Assessment Framework: Function over Form JF - Ledger JA - ledger VL - 3 IS - 0 SE - Research Articles DO - 10.5195/ledger.2018.121 UR - https://ledger.pitt.edu/ojs/ledger/article/view/121 SP - AB - <p>The rise of cryptocurrency as a new <em>sui generis</em> asset class creates a need for a new classification scheme to cover the wide range of functionality for which tokens can be used. By differentiating tokens based on their functional attributes, cryptocurrency tokens can be categorised into <em>crypto-transaction</em> tokens (which act as a cash substitute); <em>crypto-fuel</em> tokens (which underpin generic blockchain applications); and <em>crypto-voucher</em> tokens (which can be exchanged for a predefined asset). This classification is applied to identify important issues when considering whether to participate in a cryptocurrency system, such as the impact of potential forks, token supply expectations and the level of dependence on a few operators (<em>entity-dependence</em>). For crypto-transaction tokens (and crypto-fuel tokens if used in a similar or overlapping role) it shows the importance of the token being seen as a “better” form of money. For crypto-fuel tokens, the popularity of blockchain applications and the utility of the crypto-fuel system in application development is vital. For crypto-voucher tokens, the value of the underlying asset, the token’s exchangeability for that asset and the importance of a digital representation should be considered by participants. The interplay between fundamentals and speculation as drivers of price is considered.</p><p>An erratum to this article has been published at as <span>DOI: </span><a id="pub-id::doi" href="https://doi.org/10.5195/ledger.2018.151">https://doi.org/10.5195/ledger.2018.151</a>.</p> ER -