Token Economy: How the Web3 reinvents the Internet
Second edition, first amended printing, Nov 2020.
The first edition was published by BlockchainHub Berlin https://blockchainhub.net in June 2019 under the title “Token Economy: How Blockchain & Smart contracts revolutionize the Economy” and had two amended editions.

English: https://github.com/sherminvo/TokenEconomyBook/wiki.
Print book (paperback & hardcopy) and eBook editions are also available on Amazon (https://amzn.to/2W7lQ8h) & other online bookstores. German Version: is being translated and published in a seperate Github Reporistory: https://github.com/sherminvo/TokenEconomyBuch/wiki

Japanese: is currently being translated by a team in Japan and published in a separate Github Repository: https://github.com/Naokiakazawa/TokenEconomyBook_JP/wiki If you want to contribute to the collective translation please contact the repository owner Naoki Akazawa on Github or by email: [email protected]. He is coordinating the translation with a local community

Portugese: currently being translated by António Chagas, Courtnay Guimaraes, Jose Rui Sousa and Joana Camilo and will be published in a separate Github Repository soon. If you want to contribute to the collective translation please contact: [email protected], [email protected], [email protected]

Chinese: currently being coordinated and translated by Joanne Long. If you want to contribute to the collective translation please contact: [email protected]

Farsi: is currently being translated by in a telegram channel by Malihe Mahdavisefat. Due to the sanctions against Iran, Github limits Iranians from contributing, which is why Malieh started the translation in her Telegram channel: t.me/rayablockchain. Contact her directly for collaboration.

Catalan: coordinate with Marc Rocas [email protected]

Spanish: coordinate with [email protected] and Sebastián Heredia Querro [email protected]

This book is an attempt to summarize existing knowledge about blockchain networks and other distributed ledgers as the backbone of the Web3, and contextualize the socio-economic implications of the Web3 applications, from smart contracts, tokens, DAOs to the concepts of money, economics, governance and decentralized finance (DeFi). It builds on the educational work that we started at BlockchainHub, an Info:Hub and Thinking:Hub based in Berlin, with the aim to make the Web3 accessible to a general audience.

Blockchainhub.net was the first website to systematically compile and disseminate blockchain and Web3 knowledge to a general audience and has been operational since 2015, first with a series of blog posts, which were later compiled and contextualized in the Blockchain Handbook, available for free. This book builds on the legacy of the past activities and goes one step beyond: The focus is now on tokens as the atomic unit of the Web3. The basic structure of the second edition of this book is the same as the first edition, with slightly updated content of existing chapters, minor corrections, revised terminology and four additional chapters: “User-Centric Identities,” “Privacy Tokens,” “Lending Tokens,” and “How to Design a Token System.”

This book would not have been possible without the input and feedback of many collaborators of the years, which is the reason why I relase it under a non-commercial creative commons licence (see more below). The idea is that anyone can fork this wiki to either (i) add code contributions to the theoretical examples mentioned in this book, (ii) create future iterations with new /modified chapters or (iii) translate this book into another language, and distribute it non-commercially (for free). To do this you can fork this wiki and start translating the texts under your own Github account anytime and publish the modified/translated book on Github directly. I can send you the original AI files for creating translated version of the graphics. I can also try and support you get funding with a Gitcoin grant or another crowdfunding campaign so you get money for the work you put in. (With this licence you are not allowed to sell the book or use it for other commercial projects!)

Copyleft 2020, Shermin Voshmgir: Creative Commons – CC BY-NC-SA
This license allows reusers to distribute, remix, adapt, and build upon the material in any medium or format for noncommercial purposes only, and only so long as attribution is given to the creator. If you remix, adapt, or build upon the material, you must license the modified material under identical terms.
More info here: https://creativecommons.org/licenses/by-nc-sa/4.0/
If you plan a translation, or other iteration of the book, best to coordinate with me to avoid redundancies, in case someone else is already working on a similar translation/version. For commercial permissions contact: [email protected]

Author: Shermin Voshmgir
Publisher:Token Kitchen, 10119 Berlin
http://token.kitchen
Design: Justyna Zubrycka
Production: Caroline Helbing
Copy edit: Paisley Prophet
Cover design: Carmen Fuchs
Ebook layout: Shermin Voshmgir

A ebook edition is available under ISBN: 978-3-9821038-3-9
A print edition is available under ISBN: 978-3-9821038-1-5

While some readers might have a good understanding of blockchain networks and similar distributed ledgers, it is assumed that many readers still need an introduction to the topic. Without an understanding of the fundamental building blocks of blockchains, smart contracts, and the Web3, it will be hard for readers to assess how, when, and why token use cases might be a game changer. This book provides a general overview of the underlying technology and resulting socio-economic implications thereof, before deep-diving into the topic of tokens.

Chronological reading is recommended, especially for readers who are new to the topic. However, the book also works in a modular way, allowing for cross-reading between chapters. Certain sub-chapters of the first part might be considered to have too much detail for some readers and can easily be skipped. Some basic information on the cryptoeconomic mechanisms behind blockchain networks, and Bitcoin in particular, might be repeated over several chapters. Assuming that many readers will cross-read and might skip some chapters, this minimal repetition is intentional, as a basic understanding of the consensus mechanism behind public distributed ledgers is essential to the understanding of many of the other chapters.

In some cases, complementary technologies or the names of start-ups will be briefly mentioned to make the technology and its use cases more tangible, without describing them in detail. Certain topics can only be briefly explained on a high level, as a more thorough explanation would be beyond the scope of this book. In such cases, the references at the end of each chapter can help to deep-dive into the respective sections of interest. Given the broad range and multidisciplinary nature of the topics discussed, it might be hard to please the needs of all readers, since not all specialist terms can be explained. It is assumed that the reader will conduct an independent Internet search in such cases.
The graphics in this book intend to visualize the core message of the topics discussed. They sometimes use metaphors or apply an intentional level of abstraction to allow for better understanding, especially for those who are new to the topic. Due to the emerging nature of token applications and their underlying Web3 networks, some details of the projects mentioned in this book might have become obsolete by the time of reading the book. The overall content of this book, however, is structured in a way that the general information will remain relevant.

I would like to express my gratitude to a few people who have inspired or supported me from the very beginning of the crypto journey, or who have contributed with input and feedback to this book: Peter Kaas, Valentin Kalinov, Alfred Taudes, Michael Zargham, Justyna Zubrycka, Caroline Helbing, Jakob Hackel, Kris Paruch, Susanne Guth, Guido Schäfer, Sofie Schock, Tom Fürstner, Robert Krimmer, Markus Sabadello and all the advisors and collaborators of BlockchainHub, including my dear friends from Lunar Ventures in Berlin. I am also grateful for all the people who supported the creation of the Cryptoeconomics Research Lab at the Vienna University of Economics, and who believed in the necessity of dedicated interdisciplinary research on this topic.

I am especially grateful for the hospitality and open environment of the Ethereum Office in Berlin, who offered us shelter in their co-working space when setting up the BlockchainHub, and the open mind of all the people involved in post-“TheDAO hack” activities, working 24/7 to find a solution to recover depleted funds, which taught me a great deal about open-source software development and bug fixing in decentralized networks.