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In the following sections we explain what are native cryptocurrencies, then programmable native cryptocurrencies, their primary, secondary and tertiary functions, and what gives them economic value. We also explain what are not programmable native coins.
1. What Are Native Cryptocurrencies?
As we explained in our previous class, native cryptocurrencies are the tokens or coins that are issued by a blockchain network protocol each time there is a new block produced.
Examples of these are Bitcoin, Ethereum, and Ethereum Classic.
2. What Are Programmable Native Cryptocurrencies?
Programmable native cryptocurrencies are exactly the same as native cryptocurrencies, but their networks also support smart contracts, which are decentralized software programmes. This makes these cryptocurrencies programmable.
Examples of these are Ethereum and Ethereum Classic.
3. What Are Programmable Native Cryptocurrencies Used For?
The primary use of programmable native cryptocurrencies or coins is to compensate miners or stakers in proof of work or proof of stake blockchains for their role in organizing transactions, executing smart contract code, and producing blocks.
The secondary use is to pay for gas fees so that miners or stakers may include transactions in new blocks.
A tertiary use case of programmable native cryptocurrencies is for the public in general to use them as money for any kind of transaction in the global economy or as a store of value for savings and investment.
This includes the use of these coins inside decentralized applications, or dapps, which are powered by smart contracts.
4. What Is The Economic Value of Programmable Native Cryptocurrencies?
In their primary and secondary uses, programmable native cryptocurrencies have a fundamental economic value of serving as mediums of exchange of the coins for the new blocks created in the networks and the inclusion of new transactions and smart contract execution.
This gives native cryptocurrencies a natural economic demand since inception.
Similarly, as these cryptocurrencies have a base economic value in their primary and secondary uses, and are divisible and transferable, they have gained general economic value in decentralized applications and the global economy as they have become sound money for payments and settlements, and gained status as stores of value.
5. What Are Not Programmable Native Cryptocurrencies?
Native cryptocurrencies such as Bitcoin and Litecoin do not support smart contracts, therefore are not programmable native coins.
On the other hand, in programmable blockchains it is possible to write software programmes to issue cryptocurrencies. The smart contract protocol used for these cases is the ERC-20 standard.
However, these are not native cryptocurrencies as they have no primary or secondary uses inside blockchains.
We will explain the latter in our next Emerald Blockchain Course class.
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