We all marvel at tokenization. Owing to it, fundraising and making your plans a reality has never been easier. Much more rarely do we stop and think, however, how it all started in the first place.
It is arguable how exactly the first token came into being. Some would tell you that the earliest examples of a token were the Roman Imperial coins used in those days to certify privileges rather than monetary value. Others reject the above claim saying instead that tokenization in the context of blockchain is something completely new and different. The term “tokenization” itself derives itself from the tokens issued as part of smart contracts.
Vitalik Buterrn and smart contracts
Smart contracts as a concept was developed by lawyer and computer scientist Nick Szabo. He came up with the term to describe in his manifesto how programmable, automatic contracts will be the way of the future. Vitalik Buterin, founder of Ethereum dubbed the process of programming using Ethereum Blocks “Smart Contracts” to commemorate Szabo’s idea. This caused quite a stir — lawyers began to consider ways to regulate smart contracts. Vitalik noticed that his new creation had attracted the attention of regulators and that was the last thing he had in mind for the new project. It is another matter, however, if based on Nick Szabo’s thinking the instance of programming in blocks where value migration is regulated can be referred to as “smart contract” at all.
It caught on, though
Despite all that, “smart contracts” has become a fixture in the blockchain market. Solidity, the programming language used by Ethereum is defined as “a language for implementing smart contracts”. It is not, therefore, that lawmakers simply overuse the term to make programmers’ lives more difficult but, instead, programmers themselves use the term in what some would consider questionable ways. It has to be mentioned at this juncture that the creator of Solidity is Gavin Wood — also involved with Ethereum. Many people involved in the project — like Vlad Zamfir — believe that the creator of blockchain’s new generation (Buterin) should never regret his decision, as everything would have likely turned out exactly the same way had the term been less legalistic and more boring.
The “smart contract” tokens
It is also worth noting that “smart contract” tokens sound attractive to investors. This also shows us how they differ from the aforementioned ancient Roman coins: they are digital and resultant from procedures which were programmed into existence.
Those with an affinity for barbs will no doubt point out that coin-operated vending machines were also invented in ancient Rome and, therefore, there is in fact nothing new under the sun. I would be more inclined, however, to side with those who argue that Vitalik Buterin’s invention is groundbreaking and is not in the same category with older once-novelties. The result is impressive, indeed. Tokenization allows for easier investment and forging one’s idea into a success with tokens.