Token Map Series
3 — Token Jargon
Welcome back to the Token Map, your trusted 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.
Let’s talk about Tokens and the translate the jargon used when discussing them.
Fungible
Examining physical money in Episode 2 introduced us to fungible tokens. These tokens have interchangeable value with each other, meaning that any quantity of them and their sum value has the same value as another quantity’s sum value. This can be nuanced in some scenarios which require quantities be in the same class or series.
Or put very simply, a pile of cash equal to $1,000 made up of 10 $100 bills has the same value as $1,000 comprised of all pennies ($.01). In this case, the value of carrying 10 pieces of paper vs. 1,000,000 coins depends on the physical fitness goals of the bearer.
Obviously, there is additional value nuance in this example when the bearer instrument is affected by gravitational forces and technically not in the same class. In the physical world, subdividing a bearer instrument not designed to subdivided creates serious concerns as to the authenticity of the resulting torn bits of paper.
Physical cash consolidation by money changers (central banks and their commercial arms) provide services to convert your subdivided bits into whole larger bits equal in value, for a fee. Today this conversion is usually physical to digital in the form of a deposit or vice versa.
Tokens representing digital money do not require money changers within the same class and those pesky gravitational forces are hard to notice outside of quantum states and thus not a burden for the bearer.
It can get *WAY* more complex than this, but describing the benefits of a crypto currency as:
…not requiring money changers and being less susceptible to gravitational forces that can decrease portability…
…will quickly end those pesky dinner party conversations about them.
Non-fungible
A non-fungible token is not interchangeable with other tokens of the same type as they typically have different values. A car title is a good example of a non-fungible token. For example, a title to a 1971 Ford Pinto does not have the same value as one for a 2019 Porsche 911.
Baseball cards, Comic Books, Art and CryptoKitties are other examples.
Hybrids
Shared non-fungible base with fungible and non-fungible tranches
These tokens often share a common non-fungible parent or base token and then can have classes of tokens (both kinds) that are co-possessed by owners and parent token. An example of a hybrid is a concert or theater ticket, where the parent token represents the specific date or showing of the concert or play and then tranches for the various seating sections or general admission.
General admission tickets fungible in their class, but reserved seating are not.
Fungible class owns many non-fungible (usually singletons)
A token can be the owner of another token or any number of tokens to represent the compound value of the underlying tokens. For example, you could create a fungible token, where the `token class` owns a pool of non-fungible tokens.
A `token class` is like an equity share, like a stock. This class is issued with a certain quantity or shares, where each share represents the same fraction of ownership for whatever company the class represents. A token class is also like a physical money denomination, like a $1 bill. This class can be defined by denomination and series, where the series represents a version. So a $1 bill is a class that can have multiple series in circulation at the same time and should be interchangeable within the class regardless of the series. This allows the central bank to recall a series removing it from official circulation without having to retire the whole class.
When this token class owns another non-fungible token, that means that each token in that class owns a fraction of the non-fungible token. A mortgage backed security is a good example, where we can create a single security (token class) and make it be the owner of a bunch of non-fungible mortgage tokens and then sell instances of this new security to a bunch of investors where each token owns a fraction of the mortgages owned by the class. Mutual Funds and lottery pools are variations on this theme.
Ta-ta for now…
Look for the next post where we’ll be talking more about tokens.
