A high-level introduction to cryptoland with the aim to sketch out what people are getting so excited about (beyond the rollercoaster of Bitcoin price). Covering blockchains, cryptocurrencies, ICOs, DApps, DAOs and more.

1. Blockchain 101
A high-level introduction to help you move beyond the hype
@BaeriswylJ

2. “In distributed ledger technology, we may be witnessing one
of those potential explosions of creative potential that
catalyse exceptional levels of innovation.”
- UK Government’s Chief Science Advisor

3. Blockchain can be understood as a new layer of the internet
Web 1.0: Internet of information
(HTTP, HTML, Email, Text, Hyperlink, Images)
Web 2.0: Internet of Mobile/Social
(Google, Facebook, Twitter, Instagram, Youtube, Netflix)
Web 3.0: Internet of money/transactions
(blockchains, cryptocurrencies, smart contracts, tokenization)
Natively digital constructs for:
● Money
● Legal titles and rights
● Contracts & transactions
● Identity

4. Different kinds of money:
● Trusted Money
● Stable money
● Useful money
● Political or value-based money
● Branded money
The internet of money is going to change how we experience and
express value
● Digital currency that is scarce, unforgeable,
transportable, divisible, fungible
● Value based on usefulness, not authority of issuer

5. A shift from centralized to decentralized systems is happening
● Disintermediation
○ Decreases transaction costs
○ Redistributes value to participants
○ Keeps data and control at the edges
● Without
● Servers → Web 3.0
● Middlemen →Decentralized trust

6. Blockchains are distributed databases (ledgers)

7. Blockchains have powerful properties
Global Permission-less
Publicly auditable
Privacy & security
preserving
Decentralized

8. Bitcoin: a peer-to-peer digital payment system
● Introduced 2009 as a peer-to-peer digital payment system
● First app for blockchain: currency
● Trust generated through crypto-economics instead of
authority
● Use cases:
○ Digital gold: Store of value
○ Medium of transaction (like USD), “currency of the
internet”
○ Open, decentralized, permissionless → Reliable system
for people with otherwise no access to banking
● Current challenges:
○ Scalability (but
Lightning is coming)
○ Regulatory uncertainty
○ Privacy
○ Environmental concerns

9. Ethereum is a general purpose OS that allows for Smart Contracts
● Programmable blockchain
● Built-in (turing-complete) programming language
● Data stored in blockchain: Transactions and code
● Basic principle: Anyone can create an application with any rules
defined as a contract (“if this then that” - like rules)
● Smart contracts are relational software
● Decentralized trust provided on a blockchain operating system

10. Tokenization is a driving force with large scope
Scope of tokenization:
● Tangible assets
● Non-tangible assets
○ Securities and other rights
○ Natively digital assets
■ fungible assets
■ non-fungible assets
● Uniquely representing and tracking
different assets through cryptography
● Tokens on a shared infrastructure
become programmable, liquid,
divisible, transferable
There will be millions of tokens
on thousands of blockchains

11. Decentralized systems are fueled by tokens
Tokens are programmable money and can represent anything that the use-case demands, but are often used as fuel
for the network, to grant certain rights, to raise funds, and to distribute value to the participants of the ecosystem

12. FINMA (Swiss regulator) distinguishes between 3 types of tokens
● Payment tokens are synonymous with cryptocurrencies and have no further functions or links to
other development projects. Tokens may in some cases only develop the necessary functionality
and become accepted as a means of payment over a period of time (not classified as securities)
● Utility tokens are tokens which are intended to provide digital access to an application or service
(classified as securities when used as an investment vehicle)
● Asset tokens represent assets such as participations in real physical underlyings, companies, or
earnings streams, or an entitlement to dividends or interest payments. In terms of their economic
function, the tokens are analogous to equities, bonds or derivatives (classified as securities)

13. Utility tokens enable new business models

14. Example: Filecoin denominates the resource “data storage”
● ICO: 257 million USD
● Token powers ecosystem
● Allows for Dapp integration
● Decreases transaction costs
Source: Storifier

15. Smart Contracts enable ICOs, DApps, & DAOs
● ICO= Initial Coin Offering
○ Selling of new crypto token
○ Like Kickstarter, but getting equity along with the
product
○ IPOs for startups
● DAO = Decentralized Autonomous Organization
○ Company without management or board
○ Automation of business processes
○ Decentralized decision making
● DApp = Decentralized Application
○ Code that runs on a blockchain
○ Often behave like protocols
○ Emerging tech stack of interacting protocols

16. N-sided markets and aligned ecosystems
Other protocols
Users
Contributor role 1
● Digital micro economy, unified through common currency
● Different rules for each role (stakeholder)
● Incentive mechanisms designed to provoke favorable behavior (rewards & punishments in native token)
● Common currency ties the success of the whole ecosystem to individual interests
● Open & permissionless: Anybody can join (malicious actors lose money)
Contributor role 2
Malicious actor
APIs, services built on top

17. The token economy creates network ownership effects
● Ecosystems and protocols, not companies (no limited corporation, no shareholders, dividends…)
● Solves “cold start problem” of platforms (who would like to be the first to have a telephone? → who
wants to be the first to hold Facebook shares?)
● Aligns incentives of all participants & solves agency problem
● Users and investors (and managers) become one
● Everybody tries to contribute → organic hyper-growth
Decentralized systems fueled by tokens not only elegant technical solution & fairer →
often superior from strategic business perspective
Operate at lower cost, more transparent, take better decisions & scale much faster

18. Clustering top 150 cryptocurrencies
December 2017-February 2018

20. There are only 2 “killer apps” of blockchain so far
● Fundraising (USD 12 billion raised via ICOs in 2018 ytd)
● International money transfer
Up next:
● Decentralized exchanges
● Security Tokens
● Identity

21. Challenges of current blockchain technology
● Scalability
● Privacy
● Interoperability
● Volatility
● Oracles: Incorporating real-world data
● Private key loss and user experience
● Integration with existing legal frameworks (KYC/AML)
● Regulatory clarity

22. Some of the missing pieces being worked on
Data & organization
● Oracles, data markets, trusted sensors & IoT protocols
● Collaboration on encrypted data (public but privacy conserving)
● Identity, reputation
● Decentralized data storage & computing, decentralized registries and name
services, token curated lists
● Secure, interoperable, scalable infrastructure
Legal
● Legally & automatically enforceable agreements
● Tokenized certification & rights management
Tokenization & Exchange
● Fungible & non-fungible token standards
● Decentralized exchanges and atomic swap protocols
● Stablecoins & asset-backed tokens

23. Identity on the internet seems broken (was never properly architected?):
● Equifax, Cambridge Analytica etc. → data breaches seem almost unavoidable in the current system
● Sensitive personal data is held by companies and replicated across different organizational silos
● Monetized, but not properly secured by businesses; users don’t “own” their data
Native identity construct, rooted on the blockchain:
● Unified, portable, encrypted identity
● Controllable from user side: data selectively disclosed
● Automatic monetization on the users terms (handled via smart contracts & data markets)
● Attestations (by authorities or social context) instead of data itself
● No business risk for losing data
● Better (paid-for) access to data through data markets
Blockchain based identity may be the next frontier

24. We are still very early days
1994 in the
internet analogy
When we barely
had email, nobody
imagined Netflix

25. Identity layer & data exchange protocols
Timeline
Decentralized exchanges
Scalability, privacy & interoperability
Consensus layer and payments
Decentralized applications
Tokenization (securities, fiat, property, rights…)
DAOs and autonomous value creation
2018 2020 2022 2024 2026
Smart contract frameworks, oracles & prediction markets

26. Advantages of blockchain
● Automated, programmable instant/global transactions
● Emergence of global standards for value
● Open, fluid collaboration facilitated by token-fueled ecosystems
● Cost reductions in auditing, reporting, and arbitration
● No risk of data breaches
● Accessibility: providing financial services to low income areas through lower
cost and permissionless systems

27. So what?
● Money is becoming an internet content type, potentially giving rise to a
“internet of money”
● Blockchain based networks will secure and expand on the internet (Web 3)
● It may accelerate innovation drastically
○ Adds 2+ bn people to the global economy and enables more dense, fluid
collaboration
○ Locks up latent data and capital
○ General gains in efficiency through automation and market mechanisms
○ Corrects market failures and aligns incentives
○ Catalyst for exponential technologies: e.g. AI; VR; robotics

28. Blockchain systems will have an impact across industries
Starting with financial applications...
...middlemen or gatekeepers that don’t
add any value exist
...data is not properly secured or
utilized
...multiple stakeholders that don’t trust
each other interact
...and potentially everywhere where...
...contracting costs or other
transaction costs are high

29. Things are moving fast
● The World Economic Forum estimates market
capitalization of crypto assets at USD 8tn in 2027
● Token funding has surpassed traditional early-stage
venture capital funding for the first time in Q2 2017
● Large Corporates are forming alliances (e.g.: EEA)
● Top tier VC funds, investment banks, and hedge funds
are starting to invest in tokens and blockchain