Cryptocommodities: An Essential Element of Decentralized Payments
By Steven Dryall
CEO, Incipient Industries Inc.
Decentralized payment systems have revolutionized how people and organizations can transfer value. To fully realize the functionality of a decentralized digital economy, we need to ensure an equilibrium of that value. Cryptocurrencies have enabled decentralized value transfer, but where does the value come from and how can that value be assured?
Cryptocommodities are an essential element for bridging the gap between traditional and decentralized economies. Cryptocommodities contribute to digital economic stability while maintaining an optimized level of decentralization for functionality.
A cryptocommodity is defined here as a decentralized digital asset that is used to represent the value of a standardized physical asset. Cryptocommodities can be exchanged in open markets but are also convertible to a correlated physical asset at a fixed-rate quantity. Quantity is measured in units which can be based on weight, volume, size or any standardized metric.
Some simple examples could include: one digital coin equal to one physical ounce of a certain metal; one digital coin equal to one physical litre of a specific liquid; one digital coin equal to one physical gemstone of certain characteristics; or one digital coin equal to a physical cookie, of a certain flavour, perhaps chocolate chip.
A cryptocommodity is an asset-based cryptocurrency,1 applied to a specific type ...
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