Tokens – Lowering the Barriers to Innovation

I was getting my daily hit of Matt Levine’s excellent Money Stuff this morning (subscribe here!). In my favourite blockchain blockchain blockchain section he noted:

But a popular pattern in the crypto/token/blockchain world is that someone will come along and be like “finally, through tokenization, we have invented a way to slice _________ into bits and let people trade the bits.” I always find this a bit confusing. Whatever _________ is, it is safe to say that before the invention of tokenization there was already a way to slice it into bits and let people trade the bits. Slicing things into tradeable bits has been a very hot area of finance for a very long time, and people got pretty good at it. Real estate is a popular target for tokenization, for instance, and I am confused because real estate securitization—not so much mortgage-backed securities but real estate investment trusts—is a thing that has existed for a long time.

https://www.bloomberg.com/opinion/articles/2019-01-30/if-you-want-to-invest-in-pot-buy-pot

I agree with this! We’ve had securitisation before blockchains and tokens. You can chop up the title to a painting and sell it to investors in 1% slices already without blockchains or tokens.

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Colin G Platt On Peer-to-Peer

Last week I went out with for a beer and pizza with Colin G Platt of Blockchain Insider fame after we did a podcast interview about my book The Basics of Bitcoins and Blockchains at the 11FS office in Devonshire Square in London. Quite appropriately we settled down at the The Bell, a pub in east London and sometime home of the Ethereum London meetups, and talked about how peer-to-peer cryptocurrency payments are.

Here’s a summary of our conversation. Obviously it is heavily edited and we’re not as witty or eloquent as this in real life (well I’m not anyway).

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Bitcoin’s payments are not peer-to-peer!

This post is adapted from an article first published on R3’s Medium.

In this post I articulate what a peer-to-peer transaction is, why Bitcoin transactions are not peer-to-peer, and why it is important to understand the differences clearly. I describe the benefits of peer-to-peer transactions and discuss that Corda is the closest architecture to take advantage of those benefits.

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What is Blockchain?

Yesterday I did an recording where the interviewer asked me a simple question – what is blockchain? This got me thinking – I had no go-to answer for this. People use this word to cover a wide range of networks and platforms, and some platforms such as R3’s Corda (Note: I work at R3) are categorised as “blockchain” platforms, when they don’t even bundle transactions into blocks!

The best description I could come up with was:

Blockchain is a word used to describe a bundle of technologies that allow digital assets to be created and passed from party to party with guarantees that the assets are authentic and haven’t been copied or counterfeited all without needing to trust a third party to open and maintain accounts for customers.

To break this down a bit:

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Banking When the Bank is Shut – Token Maximalism

In this post I describe why freeing financial assets from the books of custodians and returning control of them to their owners as tokens could create significant benefits to an economy. This brings together concepts from traditional finance, cryptocurrencies, and enterprise blockchains.

Opening+hours+of+banks
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The Basics of Bitcoins and Blockchains

Last December I was approached by a publisher, Mango, who asked me if I would write a book about blockchain technology.  A little nervously, I agreed, and I’m excited to announce the result of six months of effort:

The basics of bitcoins and blockchains - book cover

The Basics of Bitcoins and Blockchains is an essential guide for anyone who needs to learn about cryptocurrencies, ICOs, and business blockchains.  Written in plain English, it provides a balanced and hype-free grounding in the essential concepts behind the revolutionary technology.

I wrote The Basics for an audience of business people, students, practitioners, and those who are simply interested in this technology.  I tried to make it entertaining even for those who are already working in the cryptocurrency or blockchain industry.  For example, did you know:

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Frictionless Tokens Create Friction

We’re gonna need another intermediary…

In 2013-15 it was trendy for online merchants to pretend to accept bitcoin as payment. It was a very cheap way to get positive media mentions and seem innovative. Overstock, Dell, Tiger direct… they were all at it after they realised it was all media upside. Even Virgin Galactic accepted bitcoin as payment for trips to space at some point (Note: I think paying for a trip to space with bitcoins is actually quite cool).

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A gentle introduction to digital tokens

Digital tokens have come to the fore recently, firstly with excitement about cryptocurrencies such as bitcoin, then with digital tokens being used to represent different assets on a blockchain.  What are they?  How can you digitise a token?  Why is it important?

When I hear the word ‘token’ I think of round plastic things like a casino chip, or something which I can use to exchange for a beer under a specific system or in a specific marketplace.

tokens
My idea of tokens.

We will explore the original usage of the phrase ‘digital token’, then take a look into the world of cryptocurrency tokens, differentiating between blockchain-native tokens like BTC on Bitcoin or ETH on Ethereum, and asset-backed tokens like IOUs on Ripple.

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