Crypto Misunderstood: It's a Database Technology, Not an Asset Class

According to Foresight News, the term 'Crypto' seems to be misunderstood. In 2011, it was a usable category with only one type of Crypto - Bitcoin. Today, it is no longer a meaningful term and, if anything, leads to a regression in understanding. A chart from Fidelity is a prime example, suggesting clients conservatively invest 40% of their wealth in 'stocks', 59% in 'fixed income', and the remaining 1% in 'Crypto'. These categories are meaningless, as in most cases, Crypto 'is' stocks; in other cases, Crypto 'is' fixed income. Take MKR tokens, for example, which are based on the Ethereum network and rank in the top 100 crypto assets by market cap on CoinGecko. As an MKR holder, you have the right to receive income from MakerDAO. MakerDAO is essentially an offshore bank, and you can enjoy buybacks, voting rights, and the right to claim residual assets after compensating creditors in bankruptcy. This is equity! Economically, buying MKR is equivalent to buying shares in a US bank. Similarly, DAI tokens are payment instruments (stablecoins) issued by MakerDAO on Ethereum and rank 25th in market cap on CoinGecko. Besides being pegged to the US dollar, DAI also pays 5% interest. This undoubtedly places it in the fixed income category, just like an uninsured interest-bearing account at a US bank. So, what exactly is Crypto? The term 'Crypto' describes a database technology, not an asset class. Various asset classes, such as stocks, bonds, options, and savings accounts (or their combinations), can be recorded and stored in Crypto databases, just like MKR is issued on Ethereum (one of the most popular Crypto databases). These Crypto databases belong to the same category as Azure SQL databases or Oracle databases, which record assets but are not asset classes themselves. Now you can understand why Fidelity's suggestion for clients to invest 99% in stocks + fixed income and 1% in Crypto is absurd. It's a category error, like Fidelity advising people to hold 99% in equity + fixed income and the remaining 1% stored in an Oracle database. Telling clients to invest 1% of their wealth in generic assets stored in an Oracle database is not just a category mistake; it sounds quite reckless. Oracle databases contain various crazy financial information, including sports betting and options. As for Crypto databases, they are notorious for being filled with Ponzi schemes and other financial scams. Crypto refers to the database technology where assets appear, not the asset class itself. The best practice would be to completely get rid of the term.