A common argument against the massive growth in blockchain tokens is “Why don’t all these decentralized applications have to create a separate currency instead of just using one that already exists?”

From the user’s perspective this is a valid question. It is far from ideal for a user to need to swap coins on an exchange before being able to use an application.

However this perspective is flawed for two reasons:

First, decentralized applications are on a journey and not yet at a destination. Most technology adoption curves struggle mightily with user experience early on in their lifecycle. The first operating systems used nothing but command line interfaces. GUI implementations were added later. During the 90s, AOL users waited minutes to log in, all the while hearing the irritating buzz of a dial-up modem. The experience will eventually get better.

Second, because Bitcoin called itself a currency, users are mistakenly assuming that all these tokens are also currencies. This mistaken assumption leads many people to believe that there should be only one currency, much the way the USD is the world’s reserve currency.

But these tokens are not currencies — they are mini-protocols. They are the protocols used to access the applications, and as we have seen through the internet, when it comes to layering protocols, abstraction is our friend.

For example, decentralized exchanges already exist (albeit with their own challenges), and as they mature token swapping will become completely abstracted from the user experience. Tokens will become the decentralized equivalent of the API keys that we all now take for granted as a behind-the-scenes means to an end.

So no, there aren’t too many “currencies” out there. In reality, only a small fraction of the items listed at www.coinmarketcap.com can even be properly referred to as cryptocurrencies. Rather they are new platforms on the blockchain that themselves use mere protocols to govern their functionality.

If we were really talking about thousands upon thousands of competing currencies in a new currency market, then yes, we would definitely expect a massive culling, Highlander-style, down to a handful of currencies used to transact business globally. But that’s just not what’s happening. Rather, a new, powerful technology with myriad untapped uses has hit the world stage, and each company that uses it has its own protocol.

Make sense? When you realize this simple fact, blockchain companies become a lot less scary.