is there a token for that? tokens demystified
TRANSCRIPT
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Is there a token for that?
Tokens demystified.
Jan Brejcha, Ph.D.
Business designer, Co-founder at Adahoy.io
@jbrejcha
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Contents
• Summary
• Initial coin offerings
• Tokens
• Regulation
• Conclusion
• Resources
• About
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Summary
• This presentation aims at providing a brief introduction to crypto
tokens, how they can be beneficial for the users, and why they can
disrupt current industries. Various examples will be discussed.
• Crypto tokens are a special kind of signs representing objects and/or
functions living in the underlying blockchain, and can be generated
by smart contracts.
• Tokens enable the viability of open source protocols, and dApps
(decentralized applications), which was previously unattainable.
• Current regulatory frameworks try to mitigate frauds in ICOs, while
helping establish tokens as a new asset class.
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@ParisHilton
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http://coinmarketcap.com
Total token capitalization
• $146,6B: 146.636.364.157,00 on market
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http://coinmarketcap.com
Total token capitalization ~$150B
• $146,6 b, 146.636.364.157,00 on market
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@ParisHilton @StephanTual
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@ParisHilton
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http://www.marketwatch.com/story/this-is-how-much-money-exists-in-
the-entire-world-in-one-chart-2015-12-18
Money in the world ~$1,2 quadrillion
Bitcoin
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Tokens
• Crypto tokens are a special kind of signs representing objects
and/or functions living in the underlying database (a distributed
ledger, or the blockchain in our case), and can be generated by
smart contracts.
• In this fashion, virtually anything can be tokenized, bringing the
benefit of easy trading, low costs, and high availability of any asset.
• Tokens virtualize already virtual objects (create simulacra), which
can be tracked on the blockchain
• Crypto tokens are currently niche and controversial. If present trends
continue, they will soon be seen as a breakthrough in the design
and development of open networks, combining the societal
benefits of open protocols with the financial and architectural
benefits of proprietary networks. (Dixon)
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Token creation
• Tokens are issued through Initial coin offerings (ICOs – mainly for
financial tokens), or Initial token offerings (ITOs – mainly for non-
financial tokens) following specific rules.
Token issuance rules govern the:
• Number of tokens issued
• Time period of the issuance
• Token price (discount v. premium)
• When the issuance ends (time v. goal)
• Type of issuance (one-off v. continuous)
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Token functions
Tokens are used as a media in decentralized applications (or dApps)
to perform various jobs. The purpose, or pragmatics, of the tokens is to
represent an entity/feature:
• Right, value exchange, toll, function, currency, and
earnings. (Moughayar)
• Intrinsic tokens, asset-backed, rights-related, currency (Neufund)
Most importantly, tokens align network participants to work together
toward a common goal— the growth of the network and the
appreciation of the token. (Dixon)
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@ParisHilton
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Token looming regulation
Regulation:
• US: Securities and Exchange Commission (SEC) – token as a
security, when acquired for money and with expectation of profit,
voting rights
• China: Total ban of tokens, ICOs, crypto currency trading
• EU/CH: Drafting a policy of tokens as a new asset class
Strategy: Circumvent v. comply:
• Use an ITO instead of ICO
• Exclude US participants/investors
• Limit to accredited investors (KYC)
• Register the token as a security (asset-backed token)
• Use only non-regulated features of the token (access token)
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Token disruption potential
Tokens bring the opportunity to revisit and extend the early ideas
behind the World Wide Web (as pioneered by sir Tim Berners-Lee),
such as:
• decentralization (and the removal of third parties),
• non-discrimination (or network neutrality),
• bottom-up design (or permissionless, unrestricted innovation),
• universality
• consensus (here, about the rules and standards).
• Tokens enable the viability of open source protocols, and
dApps, which was previously unattainable.
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@VladZamfir
…while paying, of course, great attention
to the user experience!
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Conclusion
• Crypto tokens enable a potential “breakthrough in the design and
development of open networks, combining the societal benefits of
open protocols with the financial and architectural benefits of
proprietary networks”
• The current ICO frenzy risks of creating negative PR because of
many scams, unrealized projects
• Tokens have a potential of disrupting current business models,
and enable novel viable models
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Resources: Online
• BREJCHA, J. https://medium.com/@jbrejcha/is-there-a-token-for-that-
c0002cfecb11
• COMPETITIVE COMPLIANCE.
https://medium.com/@Competitive.Compliance/9-token-functionalities-and-their-
compliance-implications-990b0c0cd164
• DIXON, C. https://medium.com/@cdixon/crypto-tokens-a-breakthrough-in-open-
network-design-e600975be2ef
• MOUGHAYAR, W. http://startupmanagement.org/2017/06/10/tokenomics-a-
business-guide-to-token-usage-utility-and-value
• NEUFUND. Blockchain Policy Initiative Report.
https://docs.google.com/document/d/1reHjcxSYk4coJDH4DzoV13iefE84hX19Og
fDXkNPQ4c/edit
• SEC. https://www.sec.gov/litigation/investreport/34-81207.pdf
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Resources: Books
• ANTONOPOULOS, Andreas M. Mastering Bitcoin: unlocking digital
cryptocurrencies. O'Reilly Media, Inc., 2014. ISBN 978-1449374044. Available
commercially from Amazon. Czech translation:
https://www.bitcoinbook.info/translations/cs/book.pdf
• CHAMPAGNE, Phil. The Book of Satoshi–the Collected Writings of Bitcoin
Creator Satoshi Nakamoto. 2014. ISBN 978-0996061315. Available
commercially from Amazon.
• MOUGAYAR, William. The Business Blockchain: Promise, Practice, and
Application of the Next Internet Technology. 2016. ISBN 978-1119300311.
Available commercially from Amazon.
• TAPSCOTT, Don; TAPSCOTT, Alex. Blockchain Revolution: How the
Technology Behind Bitcoin is Changing Money, Business, and the World.
Penguin, 2016. ISBN 978-1101980132. Available commercially from Amazon.
• WATTENHOFER, Roger. The Science of the Blockchain. CreateSpace
Independent Publishing Platform, 2016. ISBN 978-1522751830. Available
commercially from Amazon.
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Please, contact me for more information:
Jan Brejcha, Ph.D.
Business designer, Co-founder at Adahoy.io
http://jan.brejcha.name
https://www.linkedin.com/in/janbrejcha
https://twitter.com/jbrejcha