At AlphaWallet, our business revolves around tokens.
Once near the Supreme Court, I had the privilege of dining with several barristers. During the talk about the “TokenScript” that our team has done, I first used a “legal” to define the token:
"Tokens," I said, "represents the rights in smart contracts."
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It does not differ much from the traditionally signed or unregistered contracts. For example, the following figure shows the subway coin:
– This New York City metro currency is even engraved with contract terms –
It represents the passenger's interest in the “send me to the destination” contract. Although there is no passenger's signature on the subway, passengers automatically conclude the contract when they purchase the subway. The execution of this contract can be summarized as follows:
- You hold the token as a user;
- A computer (the gate in this scenario) provides you with an operation (the gate is open).
The subway currency is not much different from the digital token, except:
- Digital tokens can only be placed in a digital wallet and cannot be held by hand;
- The computer in the above example became the global computer of Ethereum, and all the systems connected to Ethereum and regarded as a source of truth.
The above only gives an example of the subway coin. But in fact, all tickets, including train tickets, airline tickets, and Disneyland tickets, can be counted as tokens. They represent, in paper form, or in digital form, a contractual relationship and the authentication mechanism on which the service provider is based.
This concept of treating tokens as a contractual interest while relying on its triggering contract execution is not new. In the movie "Fast Preparation", the protagonist John Wick holds a lot of such tokens. Every time there is a thousand miles, John will always find a token to force the bad guys to fulfill the previously agreed contracts.
– In the movie "Fast Preparation", the protagonist uses various tokens to allow the parties to fulfill their previous contracts –
I define tokens as equity in smart contracts. Some people may think that ICO tokens do not meet this definition, but in the end ICO tokens are also equity in contracts. ICO tokens are often compared to chips in casinos, which can be used to shop or exchange part of ownership of something. Although everyone usually does not think of this, the chips in the casino do represent a contractual interest, which stipulates that you can play slot machines. Also belonging to this category are some proprietary tokens that are used to represent partial ownership of an asset.
But sometimes, the rights in the contract are not so easy to be translated into a certificate. Still taking John as an example, the father of this token holder is a millionaire who made a will in the form of a smart contract. In this contract, John's identity is represented by a blockchain address; thus, John has an inheritance interest in this contract. Does this also belong to tokens? Let's take a look at it. It’s eight achievements in John’s wallet:
In John's cell phone, his interest in the will is called Inheritance, which is a token as well as the Ethereum.
In John's father's cell phone, his interest in the will is called Will.
As long as it is within the scope of the smart contract (and the system associated with it), John can do anything with the inheritance, just like other tokens. For example, he can use the estate for mortgages. Of course, I personally do not advocate this kind of behavior, but as long as there is no violation of the rules of smart contracts, John can do this. Even more exaggerated, John can even use this part of the heritage to launch a big lottery. Although this may not sound reliable, as long as the smart contract works well and you have read the “pre-purchase instructions” of the contract, you can buy it with confidence.
Let's look at a real case: The throne of king ether. This contract was deployed in early 2016, and any user who pays a certain amount of Ethereum can get an equity. The rules of the game are simple: the throne is bought by paying the contract for the Ethereum, and the Ethereum you pay can be ascended to the throne as long as it exceeds the current king. When the new user is willing to pay a higher price to spend the upper position, the throne is replaced, the new king's expenditure is the income of the old king, and the user is thus profitable. In this case, the token that acts as an interest in the contract is no longer obvious – it even has a name that is loud: the throne. The throne is the token (you must have seen it, the throne is a token).
What are the benefits of tokenization?
Listening to my talk about the concept of tokens, the lawyers did not seem to respond much, just calmly asked:
Now we have a general understanding of what is tokenization, but what is necessary for this? Even if the contract does not realize tokenization, the court will still treat the same without discrimination, and will not deny its effectiveness or refuse to do so.
On this issue, these views are popular on the Internet: “The court is just a tool for the rich to play with the poor”, “The law is made by white slave owners and high-ranking imperialists”, “lawyers are all blood-sucking parasites”, “humanity” It has fallen, we have to replace the tyrant with a machine without feelings." But these are not the reasons why I think the tokenization is so powerful. I replied:
In fact, tokens are like bricks in the wall, so that we can build a lot of interesting things.
If we don’t use the inheritance that John inherited as a token, but use it as a credit in a smart contract, it’s difficult to implement a mortgage or big lottery in the form of object-oriented. It is difficult to develop automated trading rules for them. It is also unacceptable for the inheritance of a licensed transaction (human nature, which is easy to incur a crime), but in this concept can create other tradable tokens, such as life insurance tokens. We can build a reverse life insurance token: If someone can keep your father healthy and long-lived, you can get a token reward, and the token can also be used for trading. So designed, the old father's health status has to touch the hearts of many people.
After the tokenization, the throne in the etheric throne game can also be used for trading. In fact, if the Ethereum contract considers tokenization in its original design, it is likely to provoke the speculative fanaticism and power struggle of the players, and the market will play a game of power around the throne.
Although the game of power sounds very exciting, can these imaginary things bring tangible benefits to people? Let's take a more practical example. Suppose we can tokenize the ownership of a private car. First of all, this can be used for vehicle trading, there is no longer a middleman to make a difference, the buyer spends less, the seller makes more money, and all the vehicle signages are immediately transformed into a used car trading market. But the superiority of tokenization is not limited to this, we can use programming to build more interesting things:
- There is no need to upload cumbersome documents to prove that insurance companies can directly insure private cars. After the ownership of the private car is tokenized, the insurance company's website can automatically identify the tokens of these vehicles.
- Since insurance is also a token, it can also be automatically recognized by a computer, so when the shop maintains consumption, the private car owner can directly brush the phone to enjoy the discount benefits attached to the insurance policy.
- The tokenization can also be applied to the idle car rental industry. Private car owners who want to make money by renting idle cars do not need to submit an application form of up to 4 pages, and can register directly. In this shared economy, the profitability of private cars has become a token that people can trade.
- One can use a technique such as zero-knowledge proof to prove that he owns an uninsured private car without an accident, without the need to disclose the specific information of the car. The General Data Protection Regulations (GDPR) directly loses the meaning of existence because people do not tell the insurance company which car insurance they have on.
Take a private car token as an example. Imagine what its web3 page would look like. It is worth noting that the function of the token is implemented in a decentralized manner. There is no strong centralized organization behind it, it is connected with all other related companies, and there are commercial contacts.
Tokens and smart contracts are two sides of the same concept. Tokens are intrinsic and contracts are external. Smart contracts sound like a lot of restrictions – it stipulates the iron law that judges can't overwrite, and tokenization raises our perspective to the limits of smart contracts, enabling the use of tokens to build new value. Things. Through tokenization, we can build a huge infrastructure based on smart contracts, creating an unprecedented market and empowering free and unimpeded transactions.
What is the economics of tokens?
Contrary to the myth of the riches that people relish, the economics of tokens is by no means a game of token copyrights – gamblers who thrive overnight are stepping on each other. This is not exactly the case. The Game of Rights, produced by HBO, is still on the air, but it has entered the final season, and the game of power in the old era is nearing its end. The economic impact of smart contracts and blockchains is not just about eye-catching leeks and hacking money (or a fake news war around ICO tokens). The reason why the real token economy is not seen in the market is because everyone has not yet moved in the right direction. If you want to truly understand the token economy, please let go of your doubts for the time being and think about it with my thoughts.
Suppose you plan a trip to Europe, ready to stay in Madrid for a few days, and the hotel has already been set. But all of a sudden, hotel prices in Madrid skyrocketed due to an unexpected incident. The smart assistant on your phone has pushed the following reminders:
– Smart Assistant prompts you to resell your hotel in Madrid to others and spend the night in nearby Aranjuez. On this new itinerary, you can still go to Madrid during the day and earn the difference to support the Provence stop in the follow-up French tour. If you agree to this new itinerary, you can change the train ticket and the venue ticket immediately by pressing the confirmation button. –
Why is the booked hotel so easy to resell? How can mobile assistants get market information for you? How is the resale and re-purchase brought by the itinerary change completed? This would have taken a day to investigate and fill out the form, but after the tokenization, the above operation can be completed automatically in an instant.
Not only that, because the token relies on the key in your wallet, all of the above operations do not require authorization to an intelligent assistant research and development company such as Amazon or Google. Your phone can sign the transaction locally and do all the work.
Now let us return to the reality from the fantasy coin economy. At present, our hotel reservation is not a token, so we need to introduce a third party to complete the above operation. The current solution can only be to hand over funds, identities, and travel plans to big companies like Amazon, praying that they can provide services from the perspective of our interests, rather than selling us to Google's partner merchants and agents.
Compared to the tokenized, decentralized web3 world, our current non-subvented world is inseparable from a large third party to support a business empire.
(Many hyperlinks are provided in the article, please go to the EthFans website)
Author: Weiwu Zhang
Translation & Proofreading: Anzai Clint & Min Min
(This article is from the EthFans of Ethereum fans, and it is strictly forbidden to reprint without the permission of the author.