This content was paid for and produced by Galaxy Fund Management in partnership with the Commercial Department of the Financial Times.
Bitcoin, Litecoin, Uniswap, Polygon, Chainlink, Ethereum, Tether, Stellar.
These are just a fraction of the more than 10,000 cryptocurrencies that have been created since bitcoin launched in 2009. All make use of blockchain technology, a method of recording information that is almost impossible to hack. Data is stored as a chain of individual blocks, rather than in one big database controlled by a single entity. It’s a more transparent, secure, and democratic to store and control information, and it is leading to what some are calling a decentralization revolution.
Cryptocurrencies underpin many major uses of blockchain technology, and new ones continue to be added.
So which ones should we watch?
One way is to focus not on individual assets, but on some of the buckets they fall into:
Store of value
Let’s look at the first three.
Bitcoin is the best known digital store of value; dubbed digital gold. Like the precious metal, it is mined, limited in supply, not controlled by governments, and may be used as a hedge against inflation.
Next up is Web 3.0: A platform run on the same blockchain technology that underpins bitcoin. But, with some key advancements to its functionality. The most well known is Ethereum; a generally programmable blockchain network that allows for more complex functions than bitcoin, and the name of the asset that trades on it, which has the second largest market cap after bitcoin.
And finally, we come to decentralized finance, or “DeFi”. A group of protocols that run primarily on the Ethereum blockchain. DeFi aims to replicate traditional financial functions with blockchain technology, but without the involvement of an intermediary or third-party such as a bank or brokerage.
These are just the start of the revolution. As each new development comes to market more rapidly, blockchain will soon be the foundation that underpins investing, the internet, and ever more aspects of life.