Is XYO a Cryptocurrency?

XYO is an online token created by The Permanent Company to use in a system they are developing. The goal of this system is to provide tracking services in a way that is cheaper than directly using GPS positioning information.

Co-founder of the Permanent Compan, Scott Scheper, released a rambling statement in May of 2019. In which he stated:

"Technically speaking, XYO is not a cryptocurrency. It is not intended to be used as an alternative to fiat currencies. It is not a “Bitcoin, but better because it’s more private and it scales!”.

Rather, it is a “crypto-asset”, specifically a Utility / Protocol Token that serves as an incentive mechanism for our geospatial data network."

What this means is that the XYO tokens are intended primarily to be a way to

1) Get people to create infrastructure and provide data that can be used to track the location of XY-devices.

2) Be a way to purchase this tracking data.

So the quality of a crytpocurrency that is lacking is the goal of being broadly useful in the wider economy. It is not intended that XYO coin be useful for any other purpose.

There is a problem with this argument. A cryptoasset is basically a functional token that may or may not meet the definition of being a widely used true currency (i.e. can't be used in most of the significant transactions carried out by citizens in the economy).

At this time basically all cryptocurrencies are cryptoassets, rather than true widely used currencies, so these words are not mutually exclusive. XYO is, as Scott states, a Utility Token (designed only to be used for a single purpose).

And as this article, which Steve linked to, states:

"The value of these (Utility) tokens are usually based on their expected use in the project for which they were intended."

Firstly, in advertising their products to customers, XYO tokens are repeatedly referred to by the Permanent Company as crytpo. Take for example the advertisement below,

Given that XYO cannot currently be used as a Utility token in any meaningful way, it's only value to the users being recruited by these advertisements is as a currency that can be exchanged for other cryptocurrencies or--more usefully-- for legal tender (e.g., US dollars).

Secondly, regardless of the underlying intent, XYO is listed on crytpocurrency exchanges. It is being traded as, and invested in, as a currency on these exchanges.

XYO aspires to be, but is not currently, a Utility token to use in a lower-cost tracking system that is under development.

Nevertheless, XYO definitely is a cryptocurrency. It is a cryptocurrency that derives its value primarily from speculation over its potential future value as a Utility token.

The Permanent Company has stated that they project its value in this context to be approximately $1 per token. Its currently actual value is closer to 1/10c and sinking. Which suggests investor optimism is not high.

In summary: XYO is intended to be a Utility Token--but right now it cannot be used in this way. So it is, at best, a cryptocurrency. One used to speculate about its own possible future status as a Utility Token--which is an outcome that may never come to pass.