cdixon blog

Four categories of Bitcoin-related projects

New Bitcoin-related software projects are launching every day. From what I can tell these projects fall into four main categories:

Bitcoin apps and services: These try to make Bitcoin more accessible, stable, secure, and useful. Examples: wallets, merchant services, fiat-to-crypto exchanges, crypto-to-crypto exchanges, Bitcoin derivatives exchanges, tipping services, and merchant microtransaction services.

Bitcoin protocol extensions: These are applications that use the Bitcoin blockchain as a global, secure, single-instance database and generally ignore Bitcoin-as-a-currency. Examples: Mastercoin, Colored Coins, and a Princeton project that is building a predictive market.

Altcoins: These are basically Bitcoin variants with branding and technical modifications (and their own blockchain). Like Bitcoin, the primary purpose is to allow the store and transfer of value. Examples: LitecoinDogecoin.

Appcoins: These are new projects that are inspired by Bitcoin’s architecture but are intended to do things besides storing/transferring value (they also use their own blockchain). Examples: Namecoin, Ethereum.

To me, the first two categories are probably the most interesting. If there is one thing we’ve learned from the development of Internet protocols like HTTP and SMTP, it’s that network adoption is key. There will always be better protocols, but the combination of broad adoption and open extensibility generally wins. (Although Naval and Balaji make a compelling case for Appcoins here).