Mastering Blockchain

Chapter 5. Tokenize Everything

The advent of Bitcoin gave developers an opportunity to explore different types of cryptocurrencies. Yet it was Ethereum, a totally new technology, that gave coders the ability to easily create new cryptocurrencies on top of its blockchain, known as tokens. Today, there are tens of thousands of cryptocurrencies, mostly thanks to Ethereum. The Ethereum network sparked the proliferation of the concept of “tokenize everything” via initial coin offerings (ICOs), which allow a project to raise cryptocurrency funds and give investors tokens in exchange. This chapter looks at how that happened. We’ll begin by introducing a few notable examples:

Mastercoin

Developer J.R. Willett began working on the Mastercoin whitepaper in 2011. His aim was not “to bootstrap an entirely new blockchain, as every other cryptocurrency does,” but rather “to create an entirely new network of currencies, commodities, and securities on top of Bitcoin itself.” Willett eventually realized that community backing in the form of investment via bitcoin might help foster adoption. So, he held the first “token sale,” or ICO, in 2013. This enabled Mastercoin to raise 3,700 BTC, or about $2.3 million at the time.

Ethereum

As described in the previous chapter, the beginnings of Ethereum trace back to November 2013, when Vitalik Buterin began emailing around a whitepaper proposing a new protocol based on elements of Bitcoin, Mastercoin, and other projects. This document was disseminated ...