Knowledge about crypto is bimodal– people seem to know a lot or very little and there aren’t many in-betweeners like me. There’s not much information exchange between the two groups so things that are obvious to one group aren’t often explained to the other, and because of this there are important gaps the general public’s understanding of crypto.
One of these gaps is the fact that crypto isn’t just currency– it’s also a platform that allows 3rd party developers to build on top of it (if you’ve heard of web3 that’s what that is). It’s interesting that this isn’t widely known and I speculate that if it were regular investors would be more interested.
Are we even doing web3 anymore?
It’s unclear how much adoption these platforms will get over the long term. In 2021 everyone was really hyped about web3 but not as much these days. I’m not sure if it’s because venture capital has stopped flowing, crypto prices have tanked, the app ideas were bad, or if it’s because web3 isn’t the future anymore, but I’m still betting on crypto platforms being important to the future of the web (there were lots of dumb web startups in the late 90s/early aughts but that didn’t mean that the web was not going to be A Thing).
Which coin does what
Regardless, here’s a quick rundown of which coin does what (at least in my portfolio):
Ethereum
The OG crypto platform. You can build a wide variety of “decentralized apps,” aka “dapps.” The platform is slow but secure.
Dapps: financial services, games, social networks, prediction markets, crowdfunding, payments, insurance
Polygon
Built on top of the Ethereum platform, Polygon trades speed for security–faster and cheaper but less secure. You can think of it like credit cards– credit cards are a layer built on top of the traditional banking system that makes it easier to transact, but at the cost of security. In other words:
Ethereum : Polygon :: traditional banking system : credit cards
Or, as my friend who Knows Things and didn’t like that analogy says:
Ethereum : Polygon :: Squirrel : Faster-Cheaper-Less-Secure-Squirrel
Dapps: financial services, games, social networks, NFTs, voting systems
Cardano
Separate from Ethereum and Polygon, Cardano is doing its own thing. It is positioning itself as the adult in the room, with their apps being strictly business.
Dapps: academic credentialing, preventing product counterfeiting, supply chain tracking, document authentication and identity tracking for governments, identity verification for finance
Solana
Another one separate from Ethereum and Polygon, Solana aims to do what Ethereum is doing but faster and more secure, sort of like a combo of Ethereum and Polygon, or an Ethereum that wouldn’t need Polygon to be usable.
Dapps: games, personal finance, NFTs, mobile networks
Avalanche
Another one separate from Ethereum and Polygon, intended to address Ethereum’s slowness (like Solana) and also touts lower fees.
Dapps: games, personal finance, NFTs
Bitcoin
The world’s most popular and least useful coin. This one is just a coin and does nothing else. I am in awe at its continued market share, given its lack of utility and breathtaking energy consumption.
Dapps: no dapps