Introduction

Joel Dietz and Primavera de Filippi:

"Cryptoledgers provide a novel way of issuing secure and tradable tokens via a distributed networks.

Although sometimes described as “cryptocurrency,” implying that the use value of the tokens is closest to currency, there are numerous other potential applications of these tokens that range from stock equivalents to previously unimaginable forms.

Although generally referred to as “cryptoequity” they can be divided into the following categories:

(1) Shares in a project that serve as a function similar to stock, allowing participation in the decision making and participation in financial upside (i.e. BitShares)

(2) Tokens which represent ownership in something other than a company, for example intellectual property (i.e. @@ are there no examples yet?)

(3) Product tokens which are redeemable for some product, perhaps one consumable in the context of a decentralized technology (i.e. Ethereum)

(4) Access tokens which provide access to a particular set of benefits within a network, similar to a membership (i.e. Swarm)"

Discussion

Why the Bitcoin ledger is potentially so important

BrettScott:

"Banks are information intermediaries. Gone are the days of the merchant dumping a hoard of physical gold into the vaults for safekeeping. Nowadays, if you have ‘£350 in the bank’, it merely means the bank has recorded that for you in their data centre, on a database that has your account number and a corresponding entry saying ‘350’ next to it. If you want to pay someone electronically, you essentially send a message to your bank, identifying yourself via a pin or card number, asking them to change that entry in their database and to inform the recipient’s bank to do the same with the recipient’s account.

Thus, commercial banks collectively act as a cartel controlling the recording of transaction data, and it is via this process that they keep score of ‘how much money’ we have. To create a secure electronic currency system that does not rely on these banks thus requires three interacting elements. Firstly, one needs to replace the private databases that are controlled by them. Secondly, one needs to provide a way for people to change the information on that database (‘move money around’). Thirdly, one needs to convince people that the units being moved around are worth something.

To solve the first element, Bitcoin provides a public database, or ledger, that is referred to reverently as the blockchain. There is a way for people to submit information for recording in the ledger, but once it gets recorded, it cannot be edited in hindsight. If you’ve heard about bitcoin ‘mining’ (using ‘hashing algorithms’), that is what that is all about. A scattered collective of mercenary clerks essentially hire their computers out to collectively maintain the ledger, baking (or weaving) transaction records into it.

Secondly, Bitcoin has a process for individuals to identify themselves in order to submit transactions to those clerks to be recorded on that ledger. That is where public-key cryptography comes in. I have a public Bitcoin address (somewhat akin to my account number at a bank) and I then control that public address with a private key (a bit like I use my private pin number to associate myself with my bank account). This is what provides anonymity.

The result of these two elements, when put together, is the ability for anonymous individuals to record transactions between their bitcoin accounts on a database that is held and secured by a decentralised network of techno-clerks (‘miners’). " (http://furtherfield.org/features/articles/visions-techno-leviathan-politics-bitcoin-blockchain)

Vitalik Buterin of Ethereum: What I believe

Vitalik Buterin:

"Particularly, consider some of the following claims, all of which I believe in, but which are in many cases a substantial departure from the philosophies of many other people and projects:

• I do not think that weak subjectivity is all that much of a problem. However, much higher degrees of subjectivity and intrinsic reliance on extra-protocol social consensus I am still not comfortable with.

• I consider Bitcoin’s $600 million/year wasted electricity on proof of work to be an utter environmental and economic tragedy.

• I believe ASICs are a serious problem, and that as a result of them Bitcoin has become qualitatively less secure over the past two years.

• I consider Bitcoin (or any other fixed-supply currency) to be too incorrigibly volatile to ever be a stable unit of account, and believe that the best route to cryptocurrency price stability is by experimenting with intelligently designed flexible monetary policies (ie. NOT “the market” or “the Bitcoin central bank“). However, I am not interested in bringing cryptocurrency monetary policy under any kind of centralized control.

• I have a substantially more anti-institutional/libertarian/anarchistic mindset than some people, but substantially less so than others (and am incidentally not an Austrian economist). In general, I believe there is value to both sides of the fence, and believe strongly in being diplomatic and working together to make the world a better place.

• I am not in favor of there being one-currency-to-rule-them-all, in the crypto-economy or anywhere.

• I think token sales are an awesome tool for decentralized protocol monetization, and that everyone attacking the concept outright is doing a disservice to society by threatening to take away a beautiful thing. However, I do agree that the model as implemented by us and other groups so far has its flaws and we should be actively experimenting with different models that try to align incentives better

• I believe futarchy is promising enough to be worth trying, particularly in a blockchain governance context.

• I consider economics and game theory to be a key part of cryptoeconomic protocol analysis, and consider the primary academic deficit of the cryptocurrency community to be not ignorance of advanced computer science, but rather economics and philosophy. We should reach out to http://lesswrong.com/ more.

• I see one of the primary reasons why people will adopt decentralized technologies (blockchains, whisper, DHTs) in practice to be the simple fact that software developers are lazy, and do not wish to deal with the complexities of maintaining a centralized website.

• I consider the blockchain-as-decentralized-autonomous-corporation metaphor to be useful, but limited. Particularly, I believe that we as cryptocurrency developers should be taking advantage of this perhaps brief period in which cryptocurrency is still an idealist-controlled industry to design institutions that maximize utilitarian social welfare metrics, not profit (no, they are not equivalent, primarily because of these)."

(https://blog.ethereum.org/2014/12/31/silos/)

The Players

Vitalik Buterin:

"There are a number of developers and researchers who are either working for Ethereum or working on ideas as volunteers and happen to spend lots of time interacting with the Ethereum community, and this set of people has coalesced into a group dedicated to building out our particular vision. Another quasi-decentralized collective, Bitshares, has set their hearts on their own vision, combining their particular combination of DPOS, market-pegged assets and vision of blockchain as decentralized autonomous corporation as a way of reaching their political goals of free-market libertarianism and a contract free society. Blockstream, the company behind “sidechains”, has likewise attracted their own group of people and their own set of visions and agendas – and likewise for Truthcoin, Maidsafe, NXT, and many others." (https://blog.ethereum.org/2014/12/31/silos/)

Key Resources

Key Articles

• Trust by Computation in the Bitcoin and Blockchain Model

• A Legal Framework For Crypto-Ledger Transactions‎‎From Primavera De Filippi.

[1]

* Blockchain technology as a regulatory technology: From Code is Law to Law is Code. By Primavera De Filippi, Samer Hassan. First Monday, Volume 21, Number 12 - 5 December 2016 [2]