In July of 2013, Adam B. Levine gave a talk at Inside Bitcoins on what he called Project Watershed. “I’ve been running communities on the internet since 2005, dealing with money and ownership are remarkably difficult things to do. Cryptocurrency changed all that for money and more recently I’ve realized that ‘tokens’ do it for ownership”
“Tokens change everything but it only matters if people use them and help explore the fringes of what can be accomplished when you think outside the ‘Cryptocurrency is Money’ paradigm.”
- Adam B Levine, Founder & CEO at Tokenly
In an exclusive interview with BraveNewCoin, Levine explained that protocols like Counterparty make it simple to create a token. What used to be impossible, pre-bitcoin, became possible, and then became easy post-Counterparty. “The challenge shifts because now having a token doesn’t even matter, literally anyone can have one. The challenge is how do you make it valuable since everybody knows the token itself is worthless when it comes into being.”
"Tokenly tokens almost always represent redeemables which can be classified as gift certificates. Another type of token you might buy is an Access Token that gives the person who holds it access to some feature, area, or service that they wouldn’t have access to without it," Levine explained. Tokenly is registered in Delaware, an R&D company working to fulfill the needs of the LTB Network, the experimental community platform that acts as the testbed for the work Tokenly is doing.
“We’re just getting started. We sometimes call the later stage business model of Tokenly a ‘Starfish Machine’. Tokenly right now is a startup, but if we’re successful then our platform will necessitate the creation and development of many projects built on top of it.“
Levine hired the first developer for Tokenly, Nick Rathman, in early 2014. They launched what would become the Tokenly Content Management System (CMS) in mid 2014, as the new engine powering LetsTalkBitcoin.com.
The LetsTalkBitcoin.com token launched under the title of LTBCOIN, a rewards program that re-imagined mining. Rather than computational work, mining became participation within a community. Since its release more than 300 million LTBCOIN have been given out to the community. Levine explained, “when we were getting started there was no way to do that without sending out thousands of individual transaction, literally by hand.”
The first tool the team created was dubbed the Mass Distributor, which he could feed a spreadsheet. A single bitcoin address could then be used to deposit all the bitcoin, for the miners fee, tokens, and for distributing. The Mass Distributor would then send out small batches of transactions at below standard Counterparty fees, monitor their acceptance into the blockchain, and re-issue any transactions that failed for any reason.
“This simple tool made the LTBCOIN rewards program possible where if we had needed to do it manually it would have been impossible, a full time job. On top of that we were able to tune the fees to achieve substantial savings.”
The possibilities of what you can do with a token and the types of systems that you can build around them really are limitless, but the token does none of it by its nature. Tokenly tools perform specific, modular functions. Individually each service is self contained and simple, but they can be assembled and connected to act as components of a larger ecosystem of value.
The core business model at Tokenly is renting token vending machines, at a flat monthly rate, and letting the people who fill them with tokens get to work quickly, without having to reinvent the wheel. “We’re not responsible for what goes in the vending machines, we’re not profiting or taking a percentage of transactions or business that goes through them,” Levine explained.
“Basically, there are so many tools and applications that can and should be built using Tokenly Tools to specifically apply the potential and possibilities to a particular market or use case.”
The three core components of the system, Swapbot, Tend, and Tokenly Pockets, will be available to early adopters in July 2015. Development is ongoing with all of the products, and now that Levine has completed the basics of the Ecosystem, they're filling a series a funding rounds to accelerate development.
Swapbot is an automated token vending machine system, currently with support for Counterparty tokens, as well as Bitcoin. What this does is provide a convenient way to automatically sell (or buy) tokens, without needing to go through a cryptocurrency exchange. Simply send some BTC, SJCX, or other accepted token to the Swapbot bitcoin address to receive your newly purchased tokens within 2 - 4 confirmations.
Each hosted Swapbot has its own website that contains its rules, swaps, and logic in a way that customers can easily understand and interact with. However, creating a stand-alone swapbot can be a little overwhelming for non experts as it requires XChain (a major backend service). The challenge of running Swapbot or other Tokenly tools on your own server is the infrastructure services that act as the eyes and ears of any given Swapbot, watching its own address on the bitcoin blockchain and vending its operators’ tokens according to operator-defined rules.
Users who just want to get started can participate in the valet alpha and get their own hosted Swapbot for $7 per month. Users who want to run Swapbot on their own server can get the most recent copy from Tokenly’s GitHub.
Tend (powered by the TokenSlot API) is a simple self-serve redemption system allowing operators to easily customize a redemption form for each good or service offered, collect the relevant information and confirm payment, then notify the merchant. Tend listens, pays attention and acts as an attendant in place of the operator who can spend time doing more interesting things.
Tend is the stand-alone version of the TokenSlot API, it doesn’t have a full-on web store or checkout system already built (like a Swapbot), instead it offers a unique, sharable order and payment page for each “slot” created. Developers can quickly add the ability to accept tokens on their website, app or service by integrating with the TokenSlot API. Documentation is available here. In the near future, TokenSlot will also be able to accept Credit Cards via Stripe and many Altcoins via ShapeShift.io.
Tokenly Pockets, a Chrome Plugin, is a non-branded fork of the LTB Companion Wallet that will (eventually) allow any token to embed its own branding on it. This will be a premium feature available on a self-serve basis for coin operators through the wallet itself.
While the company expects many people to find their hosted services the most cost-effective way to access Tokenly technologies (cheap, flat monthly fees as opposed to time, headaches and server upgrades), there will be companies eventually offering hosted Tokenly services and charging their own customers.
Tokenly will make money a few different ways in the short term while the ecosystem grows:
- Renting “Bots” and “Slots” to people who want to sell and redeem tokens
- Renting Blogs and Front Pages that utilize their collaborative content creation engine
- Providing custom installations, consulting, and integrations for enterprise or white-label customers
- Offering value-added services like in-wallet directory listings (i.e Classifieds), simplified token registration or custom token branding within the wallet and their other application environments
“Specifically on the Token, we are selling TOKENLY through a Swapbot. Each TOKENLY token represents a gift certificate redeemable for at least $5 worth of service with Tokenly hosted services like Swapbot or Tend.”
All the software is Open Source under GPL and MIT licenses with a plan to move to AGPL 3.0. The most important aspect of the AGPL license is that anyone who sees the advantage of using Tokenly services as the core of their business is required to share any improvements or modifications they make if they’re either:
- Selling hosted services
- Selling the software itself to an end-user
This means that whenever anyone improves the platform, that improvement can quickly make its way into the ecosystem and improve the experience of tokens broadly rather than in just one little corner of the pond. An overview of the building blocks for Tokenly can be found here: https://github.com/tokenly/Tokenly-Tools-and-Services.
The services available so far can be seen in the Tokenly Services Directory. Some of these services are run by the Let's Talk Bitcoin Network, while others are managed by a variety of community members.
Tokenly tools are very general in their applicability. There are several reasons why someone would want to create and use a token to represent either their time or the product of their work. Representing goods and services as a token allows them to be easily traded and transmissible through many hands. So in which cases tokens (and Tokenly) are possibly going to be best suited for?
Digital content producers (musicians, video makers, artists)
A musician could create an “Artist Coin”, and sell tokens to some of the hardcore fans to fundraise for the latest studio album. When the album is ready, the artist will sell it for FIAT money and also accept back the token originally sold at a discounted price.
This way the token is used as a crowdfunding vehicle that doesn’t lock in supporters. If they don’t want to wait for the album they can trade or give their tokens to someone else.
Businesses & Merchants
Represent their shippable inventory with tokens, get paid when it sells not when it ships. Representing and selling your product or service as a redeemable token separates the point of sale (when you get paid for the good or service) from the redemption event (when you actually have to deliver them). This has several effects:
- The uniquely named token that the merchant issues and controls is automatically fraud proof and fungible
- The person who purchases can be different from the person who redeems it
- The price, in an absolute sense, has been locked-in at the point of sale
This means that given the right incentives, anyone can become a reseller on a merchant's behalf simply by buying their products’ token and selling them to someone who would find the service valuable enough to want to purchase.
There are options for automated bulk discount programs built into Swapbots, they are easy to configure, in the future redistribution programs could start to emerge.
Represent their time by the hour with a token, can be used to encourage more sales with bulk discount rates, enables their customers to become the sales force by letting them resell time at a profit, etc.
Digital Rights Management (DRM)
Another use case where tokens could be applied is DRM to transform digital goods into property. DRM has its flaws, for instance it only takes a few days for a skilled computer geek to figure out how to crack the security measures for a piece of software or a DVD. Once the crack is known it can be shared with the entire world through the Internet for everyone to enjoy the same content for free.
Another example is when a user has a fully functional copy of a software installed on his device and shares the installation disk and serial number with a friend. The friend can also easily install the same fully functional copy. The same is true for Netflix, Bob could share his account credentials with Lara and boom she has immediate free access to the service.
Software developers, websites, and CDNs could represent their licences and access to premium features with tokens. One token could represent one licence where a user gets the software or access “unlocked” when the registered Bitcoin address holds the token. The same user could then re-sell the token, thus access to the software or service, at a later date when no longer needed. The same token could be loaned to someone else for a time, in that case the original user will have his access denied until the token has been sent back to the original address. This will guarantee that one token only grants access to one person at any one time.
AppStores, iTunes, Google Play
Token Controlled Access is going to fundamentally change how we interact with app-platforms. Right now what happens when someone buys something from an app store is their account is billed and gets granted a license for the purchased content. This license means that the account can download and use the app as much as it wants but there is no concept of selling the access to the app because it’s not something the end user owns, just something that is owned by an account.
Imagine instead of getting a license associated with an account, a token is delivered to an end user media wallet. All the tokens present in the media wallet make up the available library which, at the same time, controls the private keys. The platform software just looks at the wallet content on the blockchain to see what access to grant, according to the rules within the system.
This means that a end user can now choose to give or sell any of these access tokens making sharing of these digital goods very similar to sharing a physical book with a friend. When they possess it, the original user does not. Because unlimited copies cannot be made for free there is no issue in saying the end user really owns the items and can sell them should they desire.
Video Game Producers
We already started seeing video games using the blockchain for their in-game economy, like for example Spells of Genesis. They have actually started using Swapbots (1, 2) to sell some of their blockchain-based cards. In the future more and more games are possibly going to use tokens to buy and sell in-game digital assets or premium feature access.
TaskRabbit and services alike
TaskRabbit, a microjobs service, could issue a token that represents one standard unit in their system which would then be paid out through their rewards type program to users. Users would also use them to pay each other for tasks. The difference you get adding tokens is the value created within the system is no longer trapped within it. If someone is standing in line for a task and he/she rather sell 20 RabbitBucks for bitcoin instead of redeeming them for services within the system, they can do that with tokens. Whereas without the token the credit could only be transferred to another user account within the system.
Tokenly is going to make their own “competition” by just releasing their products open source with commercially permissive licenses. They want to see token vending machines become pervasive to the point where everybody knows what they are, because everyone is using them, whether to sell their own tokens or because it gets them to best deals with the merchants who are.