Token Map — Introduction

1 — Introduction to Tokens, Contracts & Identity

Welcome to the Token Map, your trusty guide for Tokens, Contracts and Identity in the exciting world of blockchains.

Brought to you by Marley Gray in collaboration with Conor Svensson at Web3 Labs.

Start

If you are new to blockchains (a.k.a. distributed ledgers) or even been immersed in them for years, you may find yourself helplessly confused or lost in the deep dark woods. You may be asking yourself, what is this all about? What was I doing in the first place?

The Token Map is for you.

Here we take a step back, or zoom out if you will, to reevaluate the big picture. What makes blockchains seem so interestingly magical to some and often dismissed by others?

Previous papers in the Token series provide an introduction and guide for you to grasp the basic concepts involved when approaching blockchains. So we will not dip into the whole distributed consensus algorithms burrow nor will we debate varying approaches of achieving some usable level of privacy.

But often, those who are immersed in experiments or proof of concept projects, come up for air and ask themselves, couldn’t I have just used a traditional database or application for this? Is what I am trying to do even a valid use case for blockchains?

And shouldn’t the previous question be: Is what **we** are trying to do even a valid use case for blockchains?

So, this map will bring you back to the basics and help guide your thinking and approach to true multi-party, distributed applications using blockchain technologies.

But first, a bit of level setting here for our first topic, Tokens. There are currently two token universes at the moment. A public universe heavily tilted towards crypto currency use cases that features a diverse and wide selection of blockchain choices each of them differentiating themselves on the technical underpinnings and evolving new economic models. And an enterprise or corporate universe that provides a narrower choice of blockchain technologies focusing on evolving existing economic models with a more diverse and wide view of tokens.

At some point the boundary between these two universes, public and private, will blur as the technology and social, economic, legal, regulatory and practical aspects involved with this disruptive technology matures. But for now, it’s pretty safe to think that the use of tokens in the public universe is narrowly focused on different versions of money or crypto currency and the private universe is widely focused on tokens that are not.

Again, this will change and there are crossovers and I’m sure someone will take offense at this generalization, which is probably an indication that this paper is not for you.

Building Blocks

There are 3 basic building blocks: Tokens, Contracts and Identity when conceptualizing a blockchain application. Before we jump in, lets pin a simple definition of what the underlying blockchain or shared ledger is:

A shared ledger uses cryptography that is trusted by multiple parties to authentically represent tokens or assets of value that can be owned by accounts belonging to the parties that trust it.

Wow, that is a mouthful and can get WAY more complicated. But for all intents and purposes, this definition of a ledger that represents a shared “truth”, or is really good at establishing authenticity using cryptography is the only thing you really need to understand to be able to envision what you might be able to do with it.

Tokens

Monopoly and Bearer Instruments

Tokens are representations of something. Think about the board game Monopoly — the whole game is tokens. You have the game piece that each player chooses to represent themselves in the game. You also have the property cards a player purchases. Oh, and the money the players earn and use to purchase those properties and the “Get out of Jail” card a player can draw when they get into trouble.

Each of those things represents a token, but these tokens are not of the same type. A game piece represents a player, or say an identity or account. The money represents, well, physical money and the property cards represent a land deed or title. Note, the property cards also contain details like rents or fees which represent contracts, which we will cover later.

In the Monopoly game, the money and property cards are bearer instruments. Meaning, a player can be the owner of money or property, no strings attached. Which is to say, when the game is over, no record is kept for who previously owned a property or held that particular $500 bill. So a bearer instrument is anonymously sold or redeemed.

Note, we are using the term bearer instrument generally to describe the concept not describe actual financial instruments

You know the saying, “possession is 90% of the law”, well that means if you possess or bear the instrument, say a dollar, you are the owner and can do anything you want to with it. Physical money, in your hand, pocket, etc. is a kind bearer instrument. Historically, so were some stocks, bonds and titles as proof of asset ownership. These are pretty scarce today for numerous reasons, which we will get into later.

So, digital tokens are not generally bearer instruments, in fact by default they are anything but. A blockchain token has a full history or lineage which can be traced back to its origin. This level of scrupulous record keeping makes it difficult to hide if your account number happens to become is known.

Anyway, discussing the history of bearer instruments is really useful in understanding how token can represent something valuable. A digital token can represent some asset of tangible value, which is owned by another token that usually represents an identity or account.

Translation: The dog owns Park Ave…which means if you are the player who chose the dog, you should have the Park Ave. property card on your side of the board. Lucky you!

Thats all for now…

But how about authenticity? This and more will be covered in the next post…