Some technology startup companies are raising money in a new way, by issuing digital tokens in return for funds. This is often colloquially called “doing an ICO”, and this article aims to explain how this works.
I enjoyed listening to Episode 151 of the podcast “Epicenter” (previously “Epicenter Bitcoin”) featuring Ian Grigg, inventor of Ricardian Contracts and blogger at Financial Cryptography. Here are my notes – part transcription, with some edits. This one is a goldmine and covers many topics: bonds, contracts, cash, Chaumian e-cash, DigiCash, financial cryptography, Ricardian contracts, digital signatures, smart contracts, dispute resolution, Ethereum, triple entry book-keeping, oh my!
Misunderstandings and paraphrasing errors are entirely mine.
This gets fairly technical; if this is hard to follow, it may be helpful to read my introduction to smart contracts first. Hmm, if it’s still hard to follow, also read about blockchains and bitcoin and Ethereum, and digital tokens.
Important note: If you own more than $1,000 worth of cryptocurrency then you should definitely be using a hardware wallet instead of keeping coins on exchanges. I recommend a Trezor which you can buy for €89 directly from their website.
Ethereum builds on blockchain and cryptocurrency concepts, so if you are not familiar with these, it’s worth reading a gentle introduction to bitcoin and a gentle introduction to blockchain technology first. This article assumes the reader has a basic familiarity with how Bitcoin works.
This post tries to describe two very different uses for blockchain technology: Digital Token Ledgers that record ownership changes of digital tokens, and Activity Registers that record timestamped proofs of existence of data or agreements about data. Bitcoin is used for both.
I enjoyed listening to episode 112 of the podcast “Epicenter Bitcoin” where Casey Kuhlman, CEO of Eris Industries was interviewed. Here are my notes on parts that I found particularly interesting. Misunderstandings and paraphrasing errors are mine.
What are people talking about when they talk about smart contracts?
In the context of blockchains and cryptocurrencies, smart contracts are:
– pre-written logic (computer code),
– stored and replicated on a distributed storage platform (eg a blockchain),
– executed/run by a network of computers (usually the same ones running the blockchain),
– and can result in ledger updates (cryptocurrency payments, etc).
… In other words, they are little programs that execute “if this happens then do that”, run and verified by many computers to ensure trustworthiness.
If blockchains give us distributed trustworthy storage, then smart contracts give us distributed trustworthy calculations.
Smart contracts are one of the functionalities that sets Ethereum apart from other blockchains.