Not All Cryptocurrencies are Currencies: Supply Chain Tokens as Unique Investment Opportunities

In the Beginning

In the beginning, there was just Bitcoin — the first cryptocurrency. Fast forward to 2023, and there are over 22,000 cryptocurrencies in existence, and while most of them are essentially junk cryptos, many of them provide a useful utility and carry some measure of storage value. Although the concept of cryptocurrency initially started out as a decentralized, anonymous form of currency, other forms or cryptos, or tokens, have emerged and these tokens provide a host of useful functions without functioning as currency. These are known as supply chain tokens.

Supply Chain Tokens

Supply chain management has traditionally been a difficult process to manage and optimize. The rise of blockchain technology has opened up new possibilities for creating more transparent, secure, and efficient supply chain networks. Cryptocurrency tokens are playing an increasingly important role in this transformation, providing a way for businesses to streamline their supply chain operations and improve transparency for customers. Supply chain tokens are digital tokens that are used to track, manage and verify transactions within a supply chain. They are designed to increase transparency, efficiency, and security within supply chain operations, allowing for a more streamlined and reliable process.

Supply chain tokens are not intended to function as currencies in the traditional sense, as they do not represent a unit of value that can be used to purchase goods and services. Instead, they are used to represent assets, information or transactions within the supply chain.

For example, a supply chain token might be used to represent ownership of a specific product, such as a diamond or a piece of artwork, and its ownership and location can be tracked and verified as it moves through the supply chain. This can increase transparency, reduce the risk of fraud, and improve the overall efficiency and reliability of the supply chain.

The top 3 supply chain tokens currently in use are VeChain, OriginTrail, and Ambrosus. These 3 tokens currently have the largest market capitalization, adoption and partnerships & collaboration.

  1. VeChain (VET) VeChain is a blockchain-based platform that aims to create a more transparent and secure supply chain ecosystem. The platform allows businesses to track the origin and movement of goods, from production to delivery, using blockchain-based smart contracts. This can help to reduce fraud and counterfeiting, while improving the efficiency and transparency of supply chain operations.
  2. OriginTrail (TRAC) OriginTrail is a blockchain-based platform that aims to create a more efficient and transparent supply chain network. The platform provides a secure and decentralized way for businesses to exchange supply chain data, allowing them to improve their tracking and management of goods, while also improving customer trust and satisfaction.
  3. Ambrosus (AMB) Ambrosus is a blockchain-based platform that aims to revolutionize the food and pharmaceutical supply chain industries. The platform provides a secure and decentralized way for businesses to track the origin, movement, and quality of goods, from production to delivery, using blockchain-based smart contracts. This can help to reduce food waste, improve product safety, and increase customer trust and satisfaction.

VeChain, OriginTrail, and Ambrosus are utility tokens, as opposed to security tokens. Utility tokens are designed to be used within the platform or ecosystem for which they were created. They are not securities and do not give their holders ownership or a stake in the underlying company. Instead, they provide access to the platform’s services and functionality.

In the case of VeChain, OriginTrail, and Ambrosus, their utility tokens are used to access the supply chain management services provided by their respective platforms, including tracking of goods, smart contract execution, and data exchange.

Currency Tokens

In the case of supply chain tokens, which prioritize efficiency and transparency as well as the tracking of assets, cryptocurrencies that are more focused on use as a currency prioritize fast, cheap and secure transactions with wide scale adoption and stable value. The most well known cryptocurrency is Bitcoin, which was initially created with the aim of becoming a decentralized, peer-to-peer digital currency. By market capitalization, here are the biggest cryptos for use as a currency:

  1. Bitcoin (BTC) – Bitcoin is widely recognized as the first and most well-established cryptocurrency. It has a large and growing user base, and is accepted by a growing number of merchants and exchanges around the world. Bitcoin’s decentralized and secure nature, combined with its growing adoption and acceptance, make it an attractive option for those looking for a cryptocurrency to use as currency.
  2. Litecoin (LTC) – Litecoin is a decentralized, peer-to-peer cryptocurrency that aims to offer faster and cheaper transactions compared to Bitcoin. Litecoin has a faster block time, which allows for quicker confirmation of transactions, and its algorithm is designed to allow for more efficient mining, reducing the cost of transactions.
  3. Ripple (XRP) – Ripple is a cryptocurrency designed specifically for use in the global financial system. It has partnerships with major financial institutions and is being used as a means of payment, remittances and currency exchange by some banks. Ripple’s focus on fast and low-cost international payments make it an attractive option for those looking for a cryptocurrency to use as currency.
  4. Ethereum (ETH) – Ethereum is a decentralized, open-source platform that enables the creation of smart contracts and decentralized applications. While Ethereum is not specifically designed as a currency, its growing ecosystem and widespread adoption make it a viable option for those looking to use cryptocurrency as a means of exchange.

These cryptos are also utility tokens, and are designed to provide access to a specific platform, application or service and can be used to purchase goods and services within the ecosystem for which they were created. They are not securities and do not give their holders ownership or a stake in the underlying company.

What To Look For

Each of these tokens has its own strengths and weaknesses, and the best option for use as currency may vary depending on an individual’s needs and preferences. For example, someone looking to make fast, low-cost international payments may prefer Ripple, while someone looking for a decentralized and secure means of exchange may prefer Bitcoin. Before investing in any cryptocurrency, it’s important to carefully consider its adoption, security, and overall stability, and to seek professional advice if necessary.

When looking to adopt a crypto for use as a currency, it is important to analyze a variety of factors: network security, decentralization, and adoption. Look to a crypto that has been around for a long time, and whose network has been audited and tested over time. Newer cryptos may not have the same level of security that the more established ones might — nevertheless, even well-established cryptos and crypto platforms may have serious security flaws and can be subject to hack or cyber attack. Decentralization is another key factor to consider.

Cryptocurrencies that are decentralized and have a large and dispersed network of nodes are generally considered more secure, as there is no central point of control or failure. Wide scale adoption is another crucial factor to consider, as cryptocurrencies that have a large and growing user base and are widely adopted and accepted by merchants and exchanges are generally considered more secure, as their network effects and economies of scale can make them more difficult to attack or compromise.

Based on these factors, some consider Bitcoin to be one of the most secure cryptocurrencies, due to its large and dispersed network of nodes, its robust and secure network, and its widespread adoption and acceptance. Nevertheless, it is important to always remember that no cryptocurrency is completely secure.

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Investing in Tokens

Just like traditional cryptocurrencies, such as Bitcoin, can be used as an investment, so too can supply chain tokens. As a general rule, when looking to analyze the long-term success of a cryptocurrency, whether it is a supply chain token or otherwise, there are several metrics that should be considered. No cryptocurrency is sure to be a good investment, and it is important to know the market, the underlying technology behind the cryptocurrency, and the overall risks and potential benefits of investing in cryptocurrency. Here are a few useful metric to consider before investing in a cryptocurrency:

  1. Market capitalization: This measures the total value of a cryptocurrency, and is determined by multiplying the current price by the circulating supply. Market capitalization is often used as a rough indicator of a cryptocurrency’s popularity and overall value.

  1. Adoption and usage: This measures the extent to which a cryptocurrency is being used in real-world applications, such as supply chain management. Cryptocurrencies with higher adoption and usage are generally considered to have a higher potential for success and growth.

  1. Technology and innovation: This measures the extent to which a cryptocurrency is at the forefront of technological innovation, such as the use of blockchain technology in supply chain management. Cryptocurrencies that are more technologically advanced and innovative are generally considered to have a higher potential for long-term success.

  1. Partnership and collaboration: This measures the extent to which a cryptocurrency is working with other organizations, institutions and companies, such as supply chain companies, to expand its reach and impact. Cryptocurrencies that have strong partnerships and collaborations are generally considered to have a higher potential for growth and success.

Supply chain tokens and traditional cryptos serve different purposes and have distinct characteristics. Supply chain tokens are specifically designed to be used in the management of supply chains, and are often used to track the movement of goods, verify the authenticity of products, and streamline the supply chain process. Traditional tokens, on the other hand, can serve a variety of functions, including serving as a currency, an investment, or a means of accessing decentralized financial services. The regulatory treatment of these tokens can vary depending on the jurisdiction, and it is important to seek professional advice and carefully evaluate the potential benefits and risks of any token before using or investing in it. Understanding the differences between supply chain tokens and regular tokens, as well as the potential applications of each, is critical for informed decision-making in the world of cryptocurrencies.

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About the Author

Jeff Sekinger

Jeff Sekinger Founder & CEO, 0 Percent Who is Jeff Sekinger? Visionary Trailblazer Sekinger has been in the financial industry for over a decade. Starting

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