Why Crypto Is Not an ‘Industry’

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New concepts are complicated enough to talk about without having to struggle with vocabulary. It’s not so much the need to occasionally use arcane terms; it’s also that long-established words can be inadequate and better ones are not yet in circulation. One painful example is a word I need to use several times a day, knowing it is inaccurate.

I’m not talking about the word “crypto,” although I certainly could – it used to refer to cryptography, which is not necessarily blockchain-related. I’m referring to a description of what we are actually doing here.

Noelle Acheson is the former head of research at CoinDesk and Genesis Trading. This article is excerpted from her Crypto Is Macro Now newsletter, which focuses on the overlap between the shifting crypto and macro landscapes. These opinions are hers, and nothing she writes should be taken as investment advice.

Those of us who frequently talk about crypto invariably fall back on using the collective term “industry” to include any project building on a blockchain, issuing a token or helping assets move from one owner to another. But is “industry” correct? I looked up various definitions, and this is what I found.

• Investopedia: “A group of companies that are related based on their primary business activities”

• Collins: “All the people and activities involved in making a particular product or providing a particular service”

• Vocabulary.com: “A group of manufacturers or businesses that produce a particular kind of goods or services”

You get the drift. The most common definitions imply that an industry has a common purpose and is composed of businesses engaged in a similar activity.

Skimming through the main crypto news sites this morning, there are articles about crypto exchanges, non-fungible token (NFT) platforms, decentralized lenders, game developers, new blockchains, custody services, data storage, asset managers and more. What is the common business activity here?

We could argue that it’s the promotion of blockchain technology. But should the classification of an industry focus on its technology, or its activity? Take the health-care industry, for example – its common thread is the well-being of people, using whatever technologies it can. Or the insurance industry, whose common purpose is to provide coverage to any kind of entity. An industry united by the desire to promote a new technology rather than satisfy needs doesn’t sound very, well, industrious.

To put it another way, is the tech the “big deal,” or is what it can do more important? Those building will probably argue that the tech is a pretty big deal, and they’re right – but the tech is not going to make much of an impact on the world without use cases. And isolating the technology in its own industry grouping could hamper its impact by creating distance between it and the activities it wants to disrupt.

To be fair, this lexical confusion started with the “tech industry.” The term started out as a grouping for companies such as IBM, Oracle and Microsoft that build computers and/or software, and has since expanded to include robotics research, headset manufacturing, payments, video conferencing and mattress retailers.

Extrapolating the pattern, this sounds like a maturity issue. “Tech industry” was fine when the building of the tech was more a focus than its uses, because those uses were still nascent. But categorization was needed, a mindset was formed and other companies wanted the “cool” label.

The crypto industry is in a similar situation: In the early days, construction of cryptography and blockchain was prioritized. Now, however, the focus is also on use cases, which complicates the categorization – but habits have been set and labels happily adopted.

Invested with meaning

This brings us to why categorization matters more than most realize. Industry labels are important because of investment specialization and indices. Just as good venture funds can help projects find synergies with others in different markets, good crypto investors can also lift entire groups through connections and collective learning. And just like the market is overrun with tech exchange-traded funds (ETF) that contain a curious amalgam of business activities, so we will soon have crypto ETFs (based on listed shares but eventually also tokens) that span a range of industries.

We’ll know our category is maturing, though, when the labels blur and possibly even fade away – when we care more about what a project does than how it works. When we see blockchain-based payments companies make it into financial services ETFs. When tokenized shares of Meta Platforms (the former Facebook) and Nvidia power a metaverse ETF alongside native tokens such as MANA and SAND.

Labels matter a lot for regulation, too. Lawmakers seem to understand that they can’t regulate “technology,” but they can make sure that technology companies don’t abuse data and don’t get too big. Yet, we see many calls for regulation of “crypto” as if it was one activity, without understanding that it is already too sprawling to be regulated comprehensively.

But there is a glimmer of linguistic hope on the horizon. The fact that we even have a “crypto industry” – that it isn’t just lumped into the “tech industry” bucket – is confirmation that what we are working on is truly innovative and unique as well as a sign that, finally, the tech label is evolving. The same will eventually happen to our area.

And just as technology evolves, maybe vocabulary should also. Maybe it’s time to retire the word “industry,” at least in its application to tech and crypto. It does, after all, conjure up images of manufacturing in physical locations.

So, what then? “Sector” is too broad – it’s currently best applied to economic segments, such as “services sector” or “public sector.” Personally, I prefer “ecosystem” – it sounds more community-driven, less technology-specific and more flexible as to ultimate goals. More encompassing, collaborative and welcoming, even for those who don’t work in blockchain-related projects.

“Industry” will no doubt still creep into my writing with frequency as some habits are hard to suppress (and as my inner thesaurus will rebel against repeating “ecosystem” too much). But I’m going to give it a try – after all, the crypto ecosystem deserves better than having to make do with antiquated terminology.

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Noelle Acheson is the former head of research at CoinDesk and Genesis Trading. This article is excerpted from her Crypto Is Macro Now newsletter, which focuses on the overlap between the shifting crypto and macro landscapes. These opinions are hers, and nothing she writes should be taken as investment advice.