New members of the blockchain economy often misidentify the utility, scope and organization of blockchain projects, producing questionable assumptions along the way. Understanding the concept of a Horizontal Currency will help to evaluate projects in both speculative and non-speculative ways, with a focus on discovering projects with the potential for real world adoption in the next decade.

For centuries, nation based currencies have dominated trading and value transfer between countries, multi-national corporations and large investment groups. I call these Vertical Currencies.

In the near future, non-nation state backed currencies tied to the economic output of technology protocols may start to see significant adoption on par with nation-state backed currencies. I call these Horizontal Currencies. Horizontal Currencies may function alonside traditional reserve currencies in *some* future markets. These are the currencies that governments, multi-national corporations and citizens may hold to transact across various economies and ecosystems.

You may know Horizontal Currency by a different name: Cryptocurrency.

Not all cryptocurrencies can be classified as a Horizontal Currency. Most blockchain currencies are too limited by their scope, utility and organization.

Let’s look at an example that would not classify as a Horizontal Currency.

If Adobe created a blockchain version of the product “Illustrator,” the scope and utility of its cryptocurrency would be tied to the activities available within the product. An artist may pay for in-product purchases or exchange services in the Adobe marketplace, however they would have little reason to spend this currency on day to day transactions outside of the Adobe ecosystem. Similarly, a company like Starbucks would have little incentive to offer Adobe currency as a payment method because a) It doesn’t relate to the product/service of selling coffee and b) There is little chance Adobe’s currency becomes so wide spread that it would be advantagous for Starbucks to offer it as a payment method.

Many blockchain projects in the process of launching have similar attributes: They hope to release a product to a target audience. The very nature of “go-to-market strategy thinking” requires a project limit its scope and utility in order to “attract the right user.”

Another variable that limits the scope of cryptocurrency projects is the type of entity selected during incorporation. A for-profit entity (Corporation, LLC) might be problematic for other organizations or governments who want to use a currency or blockchain system in a wider capacity. This is due to the incentives of a corporation and the perceived bias that comes with for-profit status.

Why is this important? Because in many ways Bitcoin was a reaction to the 2008 financial crisis. It was a conscious vote against centralized banking institutions creating monetary policies that seemed opaque and counterintuitve to the wider public. Many blockchain projects you see today that have gained wide-spread attention were not created by companies. Early projects were created by independent developers with a somewhat democratic distribution model (i.e. mining or ICO). These days, companies conduct ‘private rounds’ to a small handful of crypto-hedge funds and high net worth individuals. This type of distribution skews the decentralized model and creates distrust in the wider blockchain community. What are the motivations of the blockchain project? Who profits from the project if it becomes popular? Who gains power if the system is universally adopted?

Adobe Illustrator blockchain edition would not be considered a Horizontal Currency due to its small scope, limited utility and entity type.

Ethereum, on the other hand, is an example of a horizontal currency because its scope as a project is incredibly large, the utility of the Ethereum currency is dynamic, and the entity supporting its development is non-profit.

The Ethereum protocol has signifantly more reach than a standalone product. It offers tools to build products, services and economies on top of Ethereum. These tools inherently support the Ethereum currency, creating use cases that would make it advantagous to hold and spend Ethereum. As the popularity of cryptocurrency expands as a payment method for non-blockchain based products and services, Ethereum becomes a preferred choice due to its flexibility as a digital currency. It’s perceived usefulness lies beyond any one product.

Ethereum is also not a company, it is a non-profit foundation that supports the development of the Ethereum protocol. The end game of many projects like Ethereum is to create a robust technology where the world can vote on progress and make necessary changes and decisions to the system in a democratic way.

Placing the hopes and dreams of a worldwide super computer with a universal digital currency in the hands of a corporation is risky. Public corporations are built on control and require centralized decision making from a few powerful stakeholders. It’s financial and political motivations generally require it to act in the interest of the company rather than the people. Furthermore, If the company were dissolved, its products and services would cease to exist. This creates a single point of failure that has the potential to bring down the technology if the company were to cease operations.

The non-profit, open-source nature of Ethereum creates a set of favorable conditions for a horizontal currency to spread across economic actors with various and often competing interests. People in the future may come to trust Horizontal Currencies because of their perceived lack of centralized authority by any one entity. Once a blockchain’s monetary policy is established, and the coins are mined, it’s at the mercy of the free market. Similarly, the blockchain supporting the currency is not owned and operated by a single company or goverment.

Horizontal Currencies will be one of the true benefactors of adoption in the next 1–3 years. Organizations will begin to craft strategies leveraging Horizontal Currencies in non-specutive ways. Governments will begin to see political advantages to hoarding currencies that fit within their ‘value propositions,’ and individuals will determine the flexibility and freedom of a Horizontal Currency far outweighs the current limitations of a nation’s vertical currency. It is for these reasons that it is advantagous to distinguish Horizontal Currencies from a sea of terrible ideas, lazy ICOs and gimmicky taglines.