Token Economy

The term “smart contract” itself is a bit unfortunate, since smart contracts are neither particularly smart nor do they reflect legal contracts: (i) A smart contract can only be as smart as the people coding it, taking into account all available information at the time of coding; (ii) While smart contracts might have the potential to enforce legal ... See more

Tokens might emerge to be one of the most important applications of smart contracts, potentially revolutionizing asset management as we know it. This is why the last two parts of this book are dedicated entirely to the topic of tokens.

A more primitive form of a smart contract is a vending machine. The rules of a transaction are programmed into a machine. You select a product by pressing a number related to the product you want and insert money. If you insert enough money, the machine is programmed to eject the product. If not, you would not receive the product, or if the machine... See more

Furthermore, smart contract security is still an issue that needs to be resolved on a technical level. More sophisticated contractual clauses need to be implemented to make smart contracts compliant with legal contracts, including decentralized dispute settlement mechanisms. While such developments might take more time to mature, some interesting d... See more

The separation of the “identifier,” “authentication,” and “data” is crucial to a user-centric setup. It can be seen as a system of checks and balances in a data-driven economy that guarantees the level of autonomy and privacy over one’s digital footprint, and is very contrary to how the Internet is set up today. Using a public infrastructure such a... See more

Authentication is the process with which a person, institution, or object can prove that they are who they claim they are. A person can authenticate themselves by proving ownership of an object (ID card, hardware wallet, software wallet), knowledge (password or PIN), or by a personal property (biometric data, signature). Often, a combination of the... See more

A Decentralized Identifier (DID) is a public and pseudo-anonymous unique digital identifier for a person, company, or object that grants personal control over one’s digital identity without the need for centralized institutions managing those identifiers. To guarantee independence of centralized registries, DIDs need to have certain properties. The... See more

Bitcoin’s Proof-of-Work is groundbreaking, but it comes at a cost. While it guarantees security in an untrusted network, it is slow, energy intense, and favors those who have more economic resources to spend. This is why many researchers and developers started to explore alternative consensus mechanisms to try to tackle some of Bitcoin’s major chal... See more

Therefore, the term “wallet” is misleading. The word “keychain” would be more appropriate, as it acts as a secure key storage, and as a communication tool with the blockchain network.