Why Crypto Is Not an “Industry”

New concepts are complicated enough to talk about without having to struggle with vocabulary. There is not so much the need to occasionally use arcane terms; it is also that old words may be inadequate and better ones are not yet in circulation. A painful example is a word I have 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 mean a description of what we actually do here.

Noelle Acheson is the former head of research at CoinDesk and Genesis Trading. This article is an excerpt from her Crypto is macro now newsletter, which focuses on the overlap between the changing crypto and macro landscape. These opinions are hers and nothing she writes should be taken as investment advice.

Those of us who often talk about crypto always fall back on using the umbrella term “industry” to include any project that builds on a blockchain, issues a token, or helps assets move from one owner to another. But is “industry” correct? I looked up various definitions and this is what I found.

You get the drift. The most common definitions imply that an industry has a common purpose and is made up of businesses that run a similar activity.

Browsing the top crypto news sites this morning, there are articles on crypto exchanges, non-fungible token (NFT) platforms, decentralized lenders, game developers, new blockchains, custodian services, data storage, asset managers and more. What is the usual business activity here?

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

To put it another way, is the technology the “big deal,” or is what it can do more important? These buildings will probably argue that the technology is a pretty big deal, and they’re right – but the technology isn’t going to have a big impact on the world without use cases. And isolating the technology in its own industry group can inhibit its impact by creating distance between it and the activities it seeks to disrupt.

To be fair, this lexical confusion started with the “technology industry.” The term started 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, headphone manufacturing, payments, video conferencing and mattress retailers.

Extrapolating the pattern, this sounds like a maturity issue. The “technology industry” was good when the building of the technology was more of a focus than the use, because those uses were still nascent. But categorization was necessary, a mindset was formed and other companies wanted the “cool” label.

The crypto industry is in a similar situation: In the early days, building 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 are happily put to use.

This brings us to why categorization matters more than most people realize. Industry brands are important because of investment specialization and indices. In the same way that 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 as the market has been overrun by technology exchange-traded funds (ETFs) that contain a strange mix of business activities, we will soon have crypto ETFs (based on listed stocks, but eventually also tokens) spanning a variety of industries.

We know our category is maturing when the labels blur and possibly even disappear—when we care more about what a project does than how it works. When we see blockchain-based payment companies make it into financial services ETFs. When tokenized shares of Meta Platforms (the former Facebook) and Nvidia operate a metaverse ETF together with 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 tech companies don’t misuse data and don’t get too big. Yet we see many calls for the regulation of “crypto” as if it were one activity, without understanding that it is already too extensive to be comprehensively regulated.

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

And just as technology evolves, perhaps vocabulary should too. Maybe it’s time to retire the word “industry”, at least when it comes to tech and crypto. After all, it conjures up images of manufacturing in physical locations.

So, what then? “Sector” is too broad – it is currently best applied to economic segments, such as “service sector” or “public sector”. Personally, I prefer “ecosystem” – it sounds more community-driven, less technology-specific, and more flexible in terms of end goals. More comprehensive, collaborative and inviting, even for those not working 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’ll give it a shot – after all, the crypto ecosystem deserves better than having to settle for old-fashioned terminology.