While it is safe to say that most if not all currencies follow the same metrics as USD currency, however, the same cannot be said for the crypto coins or tokens.
The key differentiators for crypto coins or tokens lie on:
1. Supply of crypto coins or tokens
2. Utility of crypto coins or tokens
3. Incentives for crypto coins or tokens - highly dependent on the supply & utility
Supply of Crypto Coins or Tokens
Unlike Fiat currency, crypto coins or tokens have two types of supply - limited & unlimited.
Coins or tokens like Bitcoin and NFT are categorised into those with limited supply.
Fixed supply may help to maintain the valuation of the coins or tokens (wherein increasing the supply will decrease the valuation), however, the incentives to use the coin or token may be lesser as the token becomes more valuable.
Coins or tokens with unlimited supply function the same as the fiat currency in which the government can choose to print more money when it decides that the economy would benefit from it.
Coins or tokens with unlimited supply are Eth and Dogecoin, to name a few.
Utility of Crypto Coin or Crypto Token
Coins and tokens function differently and are created for different purposes. Although both can be found on crypto exchanges for investing or trading purposes, they are different in the form of utility.
What’s unique with the crypto coin or token is the way it is created - it differs from one another. Hence the utility derived from each coin or token differs.
As illustrated below, some coins are created as standalone coins while other tokens are created to function in tandem with another token.
Stablecoin helps to create stability in the cryptocurrency world that continuously sees fluctuation. It is pegged (tied to) a fiat currency, usually USD but collateralised with different assets.
Ownership Economy Dethroning Creator Economy
Going back to the topic of creator economy vs ownership economy.
Creator economy sees the power of advertising and subscription.
The advertising model bombards followers with ads for their attention while the subscription model leverages a flawed system of supply-demand-price where supply is unlimited and the price is fixed.
In an ideal model, unlimited supply with a low or fixed price with no huge incentives would create a low demand.
Tokenomics allow the ideal supply-demand-price model to function, giving the ownership back to the buyer, hence the term “ownership economy”.
But really, how does it work?
Whilst not all projects are close to putting forth or implementing the perfect and ideal supply-demand-price model, most are heading in the right direction.
Web 3.0 social media or engagement platform
Instead of feeding ads to the consumer, the consumer takes charge of rewarding good content in the space and at the same time controlling all the contents. This puts the power back into the hand of consumers.