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Is there a token for that? Tokens demystified.

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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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Is there a token for that? Tokens demystified.

  1. 1. Is there a token for that? Tokens demystified. Jan Brejcha, Ph.D. Business designer, Co-founder at Adahoy.io jan@brejcha.name @jbrejcha
  2. 2. Contents • Summary • Initial coin offerings • Tokens • Regulation • Conclusion • Resources • About
  3. 3. 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.
  4. 4. @ParisHilton
  5. 5. http://coinschedule.com Total amount raised in ICOs ~$2,2B The DAO $168M
  6. 6. http://coinschedule.com Total amount raised in ICOs ~$2,2B
  7. 7. http://coinmarketcap.com Total token capitalization • $146,6B: 146.636.364.157,00 on market
  8. 8. http://coinmarketcap.com Total token capitalization ~$150B • $146,6 b, 146.636.364.157,00 on market
  9. 9. @ParisHilton @StephanTual
  10. 10. @ParisHilton
  11. 11. 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
  12. 12. 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)
  13. 13. 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)
  14. 14. 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)
  15. 15. @ParisHilton
  16. 16. 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)
  17. 17. 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.
  18. 18. http://apple.com Instead of having ”an app for thattm” in a closed ecosystem…
  19. 19. http://status.im …one can engage with open ecosystems with “a token for that”.
  20. 20. @VladZamfir …while paying, of course, great attention to the user experience!
  21. 21. 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
  22. 22. 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
  23. 23. 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.
  24. 24. Please, contact me for more information: Jan Brejcha, Ph.D. Business designer, Co-founder at Adahoy.io jan@brejcha.name http://jan.brejcha.name https://www.linkedin.com/in/janbrejcha https://twitter.com/jbrejcha

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