Abstract

۱- The tokenization of money and beyond

۲- Fundraising through ICOs

۳- Investing in blockchain tokens

۴- Building user and developer communities

۵- Open sourcing

۶- A new entrepreneurial landscape

References

Abstract

Over the past few years, Bitcoin has emerged as the first decentralized, global currency. The rise of Bitcoin has brought attention not only to digital currencies but also to the underlying technology empowering digital currencies: blockchain technology. A blockchain is a distributed ledger that records and secures transactions in a peer-to-peer network. Besides empowering digital currencies, blockchain technology has given innovators the capability of creating digital tokens to represent scarce assets, potentially reshaping the landscape of entrepreneurship and innovation. Blockchain tokens may democratize (1) entrepreneurship by giving entrepreneurs new ways to raise funds and engage stakeholders, and (2) innovation by giving innovators a new way to develop, deploy, and diffuse decentralized applications. Blockchain technology and tokens have sparked a new wave of innovation, which may start to revolutionize entrepreneurship and innovation.

The tokenization of money and beyond

Since Bitcoin was first conceptualized in 2008 and implemented in 2009 (Nakamoto, 2008), the price of Bitcoin has gone from almost zero (January 2009) to more than $4,000 (September 2017). In the first commercial transaction using Bitcoin in 2010, 10,000 Bitcoins were used to buy two pizzas (Popper, 2015). In September 2017, the same number of Bitcoins was worth around $40 million and was enough to buy a whole pizza chain. The meteoric rise of Bitcoin has made early adopters rich–—very fast. Now, people are assessing whether they should jump on the bandwagon; enthusiasts believe that Bitcoin is unstoppable andwillcontinue to risein theyears tocome,while skeptics warn that Bitcoin has no intrinsic value and is just a modern-day pyramid scheme. This debate reflects the uncertainty about the future of Bitcoin. Yet,this debate may be misplaced; whatis important may not be Bitcoin itself butthe underlying technology empowering Bitcoin: blockchain technology (Tapscott & Tapscott, 2016). Even if Bitcoin fails and disappears in the future, the underlying technology will stay with us and will continue to disrupt existing businesses and create new industries. A blockchain is a distributed ledger that is usually managed by a peer-to-peer network (Buterin, 2014b; Nakamoto, 2008). In the distributed ledger, transactions are organized into blocks that are linked together into a chain. In a blockchain, transactions are validated and recorded by distributed consensus in the peer-to-peer network, eliminating the need for a trusted central entity. Once transactions are validated, they become irreversible, verifiable, permanent, and secure on the blockchain. Because of these characteristics, blockchain technology is well-suited for empowering financial transactions, and its first successful application is the creation of Bitcoin–—the first global, decentralized digital currency. Empowered by blockchain technology, Bitcoin and other digital currencies have tokenized and decentralized money, leading to potential disruption in financial industries (Larios-Hernández, 2017).