“Crypto-currency” – Four Digital Asset Classes Which Fit Into Existing World Economy & Regulatory Infrastructure

Blockchain Technology


By Lori Jo Underhill, Independent Digital Economist and Consultant

It is unnecessary to invent a “new asset class” that requires new regulation…and one asset class isn’t enough.

The world is expending a lot of effort through committees, hearings, and commissions to determine what “crypto-currency” is.

The first fundamental construct for Digital Assets, called the UMI-DASH (Underhill Madsen -Digital Asset Sector Hierarchy) was created in late 2017 by analyzing and studying over 2000 exchange traded Digital Assets worldwide. It is based on four Digital Asset classes. Just one asset class is not enough.

Contrary to some assertions, there are no hybrid assets: an asset that changes character as it develops and evolves. For example, from a Digital Equity to a Digital Currency. Incumbent Assets do not morph in the incumbent and tangible world, they do not change. Digital Assets do not morph, they do not change. Assets are either fungible or non-fungible. An equity cannot change into a currency. These fundamental distinctions prevent a shift in a Digital Asset’s fundamental characteristics. Digital Equities can be Stores of Value or mediums of exchange in the same way that Digital Currencies can be Stores of Value or mediums of exchange. Just because Digital Assets are Stores of Value and can be exchanged, does not shift the nature of their fundamental characteristics or changes them all into currencies.

The four Digital Asset classes are:

  • Digital Commodity
  • Digital Currency
  • Digital Certificate of Value, and
  • Digital Equity

Digital Commodity

A Digital Commodity is scarce, its inherent value exists on its own without an underlying economy, has value within and outside of its own economy, and is fungible. A Digital Commodity’s value stands on its own without an underlying economy, technology, utility, or activity.

Examples: Gold, Silver, Pork Bellies, Natural Gas, Oil, Bitcoin. One bar of 24-carat gold is the same as another bar of 24-carat gold. One Bitcoin is the same as another Bitcoin in its character.

Digital Currency

A Digital Currency is not scarce, it can be produced as its underlying economy needs it; has inherent value through its value within and from the underlying economy through technology, utility, or activity that supports it; it may or may not have value outside of its own economy; and is fungible. A Digital Currency’s value is supported by its underlying economy, technology, utility, or activity.

Examples: EUR, USD, CHF, JPY, EOS, ETH, XRP. One Euro is the same as another Euro. One Ether is the same as another Ether in its character.

Digital Certificate of Value

A Digital Certificate of Value is backed by an asset and is fungible. A Digital Certificate of Value can be traded to the custodian for the underlying asset that backs it. It is a currency backed by another asset, and is fungible. The asset and the economy behind that currency supports its value within its own economy. It may or may not have value outside of its own economy.

Examples: The United States Dollar before the gold standard was abolished. The Gemini Dollar or Tether backed by the United States Dollar. The Carat backed by Diamonds. Any Digital Asset that has an underlying asset that is held in custody and can be redeemed for the underlying asset. One Gemini Dollar is the same as another Gemini Dollar in its character. These Digital Assets are sometimes referred to as “Stable Coins.”

Digital Equity

A Digital Equity represents a serialized ownership interest in an asset unto itself or underlying, is serialized and/or unique, and non-fungible.

Examples: Unique Shares of an Entity, Ownership in Real Property, CryptoKitties, Bonds, Shares in Financial Products, Unique Artwork, Jewelry, or Couture Fashion. Any asset that is serialized or unique.

All Digital Assets are Stores of Value if at least two parties agree that the asset has value. They are not all currencies so using the term “crypto-currency” isn’t proper to apply to all the Digital Assets now circulating in the world’s economy. In analyzing over 2000 Digital Assets, each and every one fits into one of these four asset classes. The construct is consistently repeatable and reproducible.

Worldwide adoption of these definitions will support development, integration, and widespread utilization of these technologies. By embracing these definitions, regulatory bodies around the world can swiftly apply existing rules and offer immediate guidance for the oversight of the activities surrounding these asset classes.

Welcome to a sneak peak of “Defining the Digital Economy,”™ © 2018 Lori Jo Underhill coming soon.


Lori Jo Underhill B.S., J.D. is a Digital Economy Analyst “Digital Economist” and Consultant with a 30-year career in technology, business, and media.  https://www.linkedin.com/in/lori-jo-underhill/