Taxonomy of Tokens

Taxonomy of Tokens.pdf

Taxonomy of Tokens

Just as the industrial revolution of the 20th century saw a rise in the special- ization and proliferation of new tools purpose built for commerce in physical space (e.g., the steam engine), we are currently witnessing an acceleration in the tools used to accelerate commerce in cyberspace.

In particular, the notion of tokenization—that specific objects and interactions might be programmed to reflect the values and norms of a community or group—has been a chief accelerant in this emerging frontier. Emerging from the open-source ethos, tokenization functions as a soft legal mechanism by which individuals are able to imbue digital and physical properties with pro- grammed rights. Paralleling the rise of Bitcoin in 2008, tokenization can be seen as a direct response to a rejection of the types of behaviors that led to the 2008 financial crisis. And while many rules and norms exist in this new wild west— cyberspace—there are glaring weaknesses in the emerging system: a lack of standardization, high incidence of predatory behavior and grifting, theft, collu- sion, and more.

Yet, there is hope. Standardization of novel architectures means it is now easier and safer than ever to deploy certain types of tokens. This eBook, a result of the efforts of many, is a chance to understand how the products within Web3 have developed so far and provides a glimpse into what the future might hold.