Instructor: Roger Royse, Founder of Royse Law Firm Course Title: The Business Basics of Blockchain, Cryptocurrencies, and Tokens Location: Stanford Continuing Studies Week: 6 (of 7) The sixth session will discuss the whitepaper with examples of actual use cases. We will also address best practices and start to learn about regulatory requirements.

1. Week 6. The White Paper
Best Practices in Describing The Business Case For Tokenization
Roger Royse
rroyse@rroyselaw.com
www.rroyselaw.com
Research Assistant: Justin Sher
Stanford Continuing Studies FALL 2018 BUS 35
The Business Basics of Blockchain, Crypto Currencies, and Tokens
Week 6 July 29, 2019
Stanford Continuing Studies BUS 35: Business Basics of
Blockchain, Crypto Currencies, and Tokens
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2. Recap: Blockchain Economics: Strategic Value
in Private Blockchains (Week 5)
Stanford Continuing Studies BUS 35: Business Basics of
Blockchain, Crypto Currencies, and Tokens
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• Blockchain as foundational technology: Is it next Internet?
• Crypto Economics: economic incentive and crypto mechanism
• Network Effects in Blockchain: value for user vs. ownership potential
• Blockchain Market Strategies
• McKinsey insight – consider market dominance and availability to
influence standards and regulation
• Tapscott’s Seven Principles of a Blockchain Economy

3. Week 6. Blockchain Economics: Strategic
Value in Blockchain
I. Importance of a whitepaper
II. Elements of a white paper
• The problem
• The solution or product
• Commercialization
• Team
• Token Issues
III. Examples: Bitfinex, Bittorrent, Abyss Token,
Stanford Continuing Studies BUS 35: Business Basics of
Blockchain, Crypto Currencies, and Tokens
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4. Intro: What Is a White Paper?
• A White paper is a document that describes a blockchain project.
• Detailed description of the system architecture and its interaction
with users, including
• Current market data and growth anticipation.
• Requirements for the issuance and use of tokens.
• Project team members, investors and advisors.
• Without a proper modelling of a white paper it would be difficult for a
project team to perform a successful ICO procedure .
Stanford Continuing Studies BUS 35: Business Basics of
Blockchain, Crypto Currencies, and Tokens
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5. Initial Coin Offering (ICO)
• An ICO is a fundraising mechanism in which new projects sell their
underlying crypto tokens in exchange for bitcoin and ether.
• Similar to an Initial Public Offering (IPO) in which investors purchase
shares of a company.
• Based on tech like ERC20 Token Standard
• Investors send funds (usually bitcoin or ether) to a smart contract that
stores the funds and distributes an equivalent value in the new token
• Often “pre-sold” to raise money to build the platform
• Tokens may have “utility” or security
• Traded on exchanges
Stanford Continuing Studies BUS 35: Business Basics of
Blockchain, Crypto Currencies, and Tokens
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6. • Mostly widely used
contents in the past
12 months
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Blockchain, Crypto Currencies, and Tokens
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I. Why important

7. Recent ICO Activity
0
50
100
150
200
250
300
$0
$200,000,000
$400,000,000
$600,000,000
$800,000,000
$1,000,000,000
$1,200,000,000
$1,400,000,000
Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19
Chart Title
Amount Raised Number of ICOs
Stanford Continuing Studies BUS 35: Business Basics of
Blockchain, Crypto Currencies, and Tokens
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Source: https://icobench.com/stats/

8. II. Elements of a White Paper
• The problem
• The solution or product
• Commercialization
• Team
• Token Issues
Stanford Continuing Studies BUS 35: Business Basics of
Blockchain, Crypto Currencies, and Tokens
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9. Crypto Funding: ICOs, IEOs, DAICOs and STOs
• https://hackernoon.com/a-comprehensive-guide-to-the-next-generation-of-
crypto-funding-v-ico-ieo-daico-eto-sto-939909782da6
• ICOs
• Tokens offered to investors to participate in some aspect of a platform. All cryptocurrency is
received upfront by developers. Anyone with cryptocurrency can invest anonymously.
• IEOs
• Like ICOs but the token is sold by an exchange leading to better vetting, compliance,
marketing and liquidity.
• DAICOs
• Like ICOs, except the holders of tokens can vote to release money to developers or refund
money to shareholders over time.
• STOs
• Allows an offline regulated security to be sold on the blockchain. Can convey ownership to
shares in a company, precious metals, real estate, or debt functioning in a similar manner to a
corporate bond.
Stanford Continuing Studies BUS 35: Business Basics of
Blockchain, Crypto Currencies, and Tokens
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10. Crypto Funding: New models are replacing
ICOs
Stanford Continuing Studies BUS 35: Business Basics of
Blockchain, Crypto Currencies, and Tokens
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11. ICOs
• Developers create a token and sell it directly to anyone with cryptocurrency.
Investors can invest millions and be completely anonymous.
• Developers receive cryptocurrency immediately.
• Tokens are usually empowered to give the users rights to use a future platform.
• Many tokens become fully liquid on exchanges, but may have to pay listing fees.
• Used to raise billions in 2017 and 2018, but interest has significantly decreased
due to high loses for investors and regulatory action including outright bans in
several countries including China.
• https://www.bitcoinmarketjournal.com/ico-regulations/
• Can easily qualify as unregistered securities causing SEC enforcement actions:
• https://www.coindesk.com/the-sec-is-suing-kik-for-its-2017-ico
Stanford Continuing Studies BUS 35: Business Basics of
Blockchain, Crypto Currencies, and Tokens
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12. IEOs
• Similar to an ICO except a cryptocurrency exchange runs the token sale.
• Purchasers of the tokens must be vetted by the exchange’s AML/KYC
process.
• Exchange helps with marketing, regulatory compliance and vetting of the
company.
• Provides investors with more confidence because the exchange is putting
their reputation on the line for the company. The company is also
immediately listed on the exchange.
• Most IEO platforms are located outside the U.S. and don’t want U.S.
investors. Major platforms are located in Singapore, Malta, Hong Kong and
Seychelles.
Stanford Continuing Studies BUS 35: Business Basics of
Blockchain, Crypto Currencies, and Tokens
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13. Stanford Continuing Studies BUS 35: Business Basics of
Blockchain, Crypto Currencies, and Tokens
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Source: https://hackernoon.com/can-binances-initial-exchange-offering-ieo-platform-lead-the-next-crypto-wave-ce6b1c054213

14. DAICOs
• Proposed by Ethereum founder Vitalik Buterin as a solution to the abuses
of ICOs.
• Allows ICO token owners to vote on releasing money to the project
developers based on milestones.
• In extreme cases, token owners can vote to return all money back to
investors. Thus, there is a significant risk that developers will not receive
all funds raised.
• Investors can be completely anonymous, but have more control of the
project.
• Have similar regulatory issues as ICOs.
• Abyss, a gaming platform, is one of the first DAICOs
• https://www.theabyss.com/daico
Stanford Continuing Studies BUS 35: Business Basics of
Blockchain, Crypto Currencies, and Tokens
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15. STOs
• Promoted by exchanges as a way to trade regulated securities on the
blockchain in compliance with all laws.
• Investors can only send/receive tokens from AML/KYC identified accredited
investors on the blockchain.
• Tokens are tied directly to real world securities held in custody by the
sponsoring exchange. Tokens can represent rights to stock, or assets such
as real estate or commodities.
• Offerings are highly supervised by and integrated into sponsoring
exchange.
• Cheaper alternative to an IPO, and unlike a VC round, investors get liquidity
among other accredited investors immediately.
• https://cointelegraph.com/explained/what-is-an-sto-explained
Stanford Continuing Studies BUS 35: Business Basics of
Blockchain, Crypto Currencies, and Tokens
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16. Tokenization and Crypto Funding
• International Markets for IEOs, ICOs and DAICOs
• Switzerland
• Singapore
• Malta
• Seychelles
• Hong Kong
• Gibraltar
• Cayman
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Blockchain, Crypto Currencies, and Tokens
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17. 8. Tokenization and Crypto Funding
• Tax
• Tax perspective: Is token equity?
• Presale and SAFT
• IRS view
• Legal
• Anti-money laundering and KYC
• Patent issues
• Securities
• Federal, foreign and state laws
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Blockchain, Crypto Currencies, and Tokens
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• Regulation
• Is my token a security?
• A currency?
• A commodity?
• Privacy
• Data Ownership

18. The Problem To Be Solved
• The market/business
• The potential customers
• The advantage of solving the
problems
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Blockchain, Crypto Currencies, and Tokens
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Source: cprop.io

19. The Product
• Product description
• Prototype data
• First users
• Development strategy
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Blockchain, Crypto Currencies, and Tokens
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20. Commercialization and Roadmap
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Blockchain, Crypto Currencies, and Tokens
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• A detailed technical description of the project and its future
development plans for the next 12-18 months

21. Stanford Continuing Studies BUS 35: Business Basics of Blockchain, Crypto
Currencies, and Tokens 21

22. Team
• Blockchain experience
• Technical experience
• Track record
• Strong team with bad idea?
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Blockchain, Crypto Currencies, and Tokens
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23. Token Issues
• Significance of cryptocurrency: value consensus
• Economic aspects (how token will offer benefits over time)
• Technical aspects (token creation period, number of tokens, expense)
• Distribution (method of dissemination, time)
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Blockchain, Crypto Currencies, and Tokens
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24. Top 10 ICOs in 2018
Stanford Continuing Studies BUS 35: Business Basics of
Blockchain, Crypto Currencies, and Tokens
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Name
Amount
Raised
Start
Date
End
Date
Description
1 EOS $4,197,956,136
Jun 26,
2017
Jun 01,
2018
EOS has raised the highest amount of funds ever in it's ico, making over 4 billion dollars. EOS is a platform that supports decentralized apps. It aims
to make work easier for develops to make these apps. For these apps it will provide things like
2 Telegram ICO $1,700,000,000
Feb 28,
2018
Mar 31,
2018
Telegram's ICO aimed to use the funds generated from the token sale to expand its functionality via Blockchain technology beyond simple
messaging services. It is hoped that this extra functionality to increase telegrams user base beyond its current 200
3 Petro $735,000,000
Feb 20,
2018
Mar 19,
2018
The Venezuelan government have attempted to circumnavigate economic sanctions by creating their own cryptocurrency and using it as a
payment method for oil. This is the first officially government backed cryptocurrency.
4 TaTaTu $575,000,000
Jun 11,
2018
Jun 22,
2018
The TaTaTu platform aims to revolutionise social media and entertainment via their Blockchain platform. Consumers of content will be paid for
their viewership as well as for supplying it. Further features include using the accumulated TaTaTu token to pay
5 Dragon $420,000,000
Feb 15,
2018
Mar 15,
2018
Dragon Coin an ERC 20 token will be used to grant access at Casinos powered by Dragon's Blockchain. All the casinos facilities will be managed by
Dragon parter junkets.
6 HetaChain $190,051,316
Oct 01,
2018
Dec 10,
2018
HETACHAIN is a super-fast DPoS + BFT hybrid blockchain network focused on addressing the age-long scalability dilemma and pushing forth a truly
democratically governed platform built for industry scale transactions while also uniquely designed for private
7 Bankera $150,949,194
Nov 27,
2017
Mar 01,
2018
Bankera is a regulated bank for blockchain. Using a structure similar to a banking system, it allows itself to provide financial servicing like
payments, loans and deposits, and investments while being fully in support of cryptocurrencies.
8 tZERO (STO) $134,000,000
Dec 06,
2017
Aug 06,
2018
tZERO aims to create a front end trading system that provides itself as an alternative to the traditional securities market. Using features like risk
management it allows users to safely buy tokens without overspending or buying the wrong one.
8 Basis $133,000,000
Apr 18,
2018
Apr 18,
2018
Basis is a price stable cryptocurrency with an algorithmic central bank. It's goal is to develop monetary policies to make sure that cryptocurrencies
have purchasing limits and their prices do not have any more massive fluctuations.
9
Orbs (Private
Sale)
$118,000,000
Feb 15,
2018
May 15,
2018
Orbs is the first blockchain that will work with real world business. It aims to take cryptocurrency to a consumer level exchange. Large corporations
can comfortably use Obs to create apps that work on blockchain but also accomodate real world business la
10 KitToken $117,447,182
Jul 20,
2018
Aug 31,
2018
KitToken’s goal is to create security and sustainability within the blockchain environment. This new environment will provide features that
increase security from a blockchain based setting, it will also only charge a fraction of the large percenta
As of Jun 1, 2019. Source: https://www.coinschedule.com/stats/

25. Stanford Continuing Studies BUS 35: Business Basics of
Blockchain, Crypto Currencies, and Tokens
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Top 10 ICO in 2019
As of Jun 1, 2019. Source: https://www.coinschedule.com/stats/
Name
Amount Raised Start Date End Date Description
1 BITFINEX
$1,000,000,00
0
May 05, 2019 May 13, 2019
Bitfinex is a cryptocurrency exchange owned and operated by iFinex Inc., which is headquartered in Hong Kong and registered in
the British Virgin Islands. Since then iFinex, through its trading platforms, has become one of the best-known and recognized c
2 GCBIB $142,686,051 Oct 15, 2018 Jan 31, 2019
GCBIB (Genesis Crypto Blockchain Investment Bank) is primarily an investment bank, with a crypto to fiat exchange infrastructure
that helps bridge the gap between the emerging crypto market and existing financial services. Powered by a combination of Bl
3
Tron Game
Global
$80,000,000 Apr 16, 2019 May 31, 2019
TRON GAME GLOBAL PAY (GTP) is a project that is currently laying the foundation for Internet decentralization about GAME
BLOCKCHAIN.
4 Bolton Coin $67,830,000 Aug 20, 2018 Feb 28, 2019
BOLTON Coin (BFCL) offers a new amazing and unique approach to investing in the crypto sphere, generating aggregates profits
from tangible luxurious markets such as gold and diamonds mining, real estate, integrated by eco-sustainable energy and
extraordin
5 Kinesis $59,278,000 Feb 16, 2018 Mar 18, 2019
Kinesis is a yield-bearing digital currency based on 1:1 allocated physical gold and silver. The vision for Kinesis is to deliver an
evolutionary step beyond any monetary and banking system available today.
6 Thunder Token $50,500,000 May 09, 2019 May 09, 2019 Thunder Token is a new crypto token that has high throughput and confirms transactions in seconds.
7 BQT $37,000,000 Aug 18, 2018 Mar 18, 2019
BQT Exchange Platform provides secure, interactive and flexible Social Trading Environment and user-friendly interface for its
community to manage various types of transactions consisting of many crypto assets.
8 Shercoin $36,000,000 Feb 01, 2019 May 02, 2019
The SherCoin team has realized that the best way to create a good cryptocurrency that will achieve mass adoption is by creating a
multi-functional token that has more than one utility.
9 Percival $35,000,000 Mar 05, 2019 Mar 26, 2019
Percival is also focused on the security provision to keep participant’s property and right, and to make it a goal to maintain the
market stabilization.
10 IPUX $35,000,000 Jan 15, 2019 Apr 30, 2019
IPUX is not only successfully operating, and has blueprints to develop, e-commerce, agriculture, and health and wellness related
businesses in ASEAN, but we are also providing solutions leveraging blockchain technology, smart contracts, AI, big data and I

26. Example: CPROP
• White paper
• Professionally
formatted
• Company
brochure type
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Blockchain, Crypto Currencies, and Tokens
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27. Vote Coin
• White paper
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Blockchain, Crypto Currencies, and Tokens
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28. Maecenas
• White Paper
• Artistic format
• Professional contents
• Three-columns
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Blockchain, Crypto Currencies, and Tokens
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29. Authentic ID
• White paper
• Web-page style
• Easy to read
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Blockchain, Crypto Currencies, and Tokens
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30. MedicalChain
• White paper
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Blockchain, Crypto Currencies, and Tokens
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31. Monetha
• Collected $37 million (95 000 ETH) in just 18
minutes.
• white paper contains all the abovementioned
sections.
• Including detailed description of the project’s
working plan, token economy, fund-using plans, and
also team members’ service record
• Showing previous business experience that raised
investments
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32. Aeternity
• Collected $34 million
• White paper: Simple
research format
• A simple two-column
document
• Short: 10 pages
• Research article
format
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Blockchain, Crypto Currencies, and Tokens
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33. Filecoin
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Blockchain, Crypto Currencies, and Tokens
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• Collected $257 million
• No refinement,
following research
article format

34. State of the ICO Market
• The ICO market has reportedly dropped by 97% based on the amount
of attracted capital in Q1 2019 vs Q1 2018.
• in Q1 of 2019 there were almost 350 ICO projects, which is fewer
than in Q4 2018. The total volume of funds raised in Q1 reportedly
amounted to nearly $1 billion, however the number is lower by
roughly $0.5 billion compared to that of Q4 2018.
• a whopping 86 percent of the 110 ICOs that accounted for nearly 90
percent of funds raised during 2017 had lower valuations in 2018.
Stanford Continuing Studies BUS 35: Business Basics of
Blockchain, Crypto Currencies, and Tokens
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Sources:https://cointelegraph.com/news/research-ico-market-down-almost-100-from-a-year-ago-raised-40-million-in-q1-2019
https://www.financemagnates.com/cryptocurrency/news/failed-expectations-why-86-of-icos-are-worth-less-than-when-they-started/

35. Stanford Continuing Studies BUS 35: Business Basics of
Blockchain, Crypto Currencies, and Tokens
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36. Stanford Continuing Studies BUS 35: Business Basics of
Blockchain, Crypto Currencies, and Tokens
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37. Stanford Continuing Studies BUS 35: Business Basics of
Blockchain, Crypto Currencies, and Tokens
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38. Takeaways
Stanford Continuing Studies BUS 35: Business Basics of
Blockchain, Crypto Currencies, and Tokens
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• A perfect white paper won’t help a bad project
• Whitepaper should suit the team and project
• Compare standard type (Monetha) vs. Research type (Filecoin)
• It is essential to take the public into account
• Who are you attracting to your ICO?
• Public vs. engineers & scientist
• You may create two versions

39. Week 7. Legal Issues
• Diverse legal issues in blockchain and cryptocurrency
• Legal structure of an initial coin or security coin offering (ICO) in the US
and globally, including the rules governing the sale of securities in the US
• Overview patent and intellectual property (IP) issues in blockchain
• Licensing agreements that provide protection to inventors while making
resources available for open innovation.
Stanford Continuing Studies BUS 35: Business Basics of
Blockchain, Crypto Currencies, and Tokens
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40. ROYSE LAW FIRM, PC
For questions , Contact
PALO ALTO
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Palo Alto, CA 94303
LOS ANGELES
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SAN FRANCISCO
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Palo Alto Office: 650-813-9700
CONTACT US
www.rroyselaw.co
m
@RoyseLaw
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SAN FRANCISCO
135 Main Street
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San Francisco, CA 94105
Menlo Park Office: 650-813-9700
CONTACT US
www.rroyselaw.com
@RoyseLaw
ORANGE COUNTY
135 S. State College Blvd
Suite 200
Brea, CA 92821
Research Assistant: Natalie Ryang
nryang@rroyselaw.com
Stanford Continuing Studies BUS 35: Business Basics of
Blockchain, Crypto Currencies, and Tokens
40