"Where are my tokens?" - They're hiding behind an unhelpful label...

. 5 min read

Many of the most common questions arising from LocalCoinSwap Cryptoshare holders are familiar to anyone who ever helped anyone else get started in cryptoassets:

Where are my tokens?

Do I have to store my tokens on the Localcoinswap exchange in order to earn dividends?

What happens if I have some of my tokens in one wallet, and some in another one…?

These questions make perfect sense, when you’re used to thinking about cryptocurrency as money - money you can spend and carry around with you, and exchange for one thing and another.  When we talk about crypto as digital coinage, this is precisely how we use these terms - spending, sending, receiving… So we think of the cryptocoin or token as physically moving between one point and another.

It’s funny though, because even ‘real’ fiat money mostly doesn’t behave like this, at least not most of the time.

If you buy a kilos of bananas in the market for cash, then sure, you hand over your Dollars or Rubles or Euros in exchange for the bag of fruit. At that point in time the money asset leaves your physical possession, and drops right into the pocket of the market seller - deal done.

But if we buy that same bag of bananas from a supermarket, we’re more likely to swipe a credit card at the till instead. So that transaction becomes a debit on ledger, which makes its way to our statement at the end of the month. And when we receive that statement we probably don’t take a big bag of coins into the bank to settle it, instead the card provider collects all or part of the payment from a current account balance. The same account that our wages went into - and we never saw those moving into there either. If your card and your bank are actually two different banks, they will net off your shopping bill amongst a vast pile of other transactions at some point to settle the balance between them - but even this almost never involves physical assets changing hands.

Yet we are ok with all of this and we still think of these funds in our account as “our money”, under our control (even though the bank could embargo it, reverse a transaction or extract charges from it, without our permission - because that’s the good old world of fiat finance).

When we get started in cryptoassets then, we hear all the time that we must look after our coins, because they’re like cash - once spent, they’re gone, the deal is good and done. Just the same as if you got home from the market and found that half your bananas were all mouldy and mushy inside, then good luck finding the seller if they’re there the following day, and persuading them to give you a refund… You’d have more luck if you’d made the transaction with a debit or credit card, because of those expensive third parties (if you could persuade them to weigh in over a bit of rotten fruit  - because they also decide the limitations and fees regarding the rules that you pay for...)

So anyway with crypto, we send a transaction and the mental model we have is of funds leaving our wallet/account, and passing mysteriously through the nodes of the blockchain somehow, till they arrive at the recipient’s address. Or when we buy or receive a transaction, we wait for a certain number of confirmations to take place, and then those assets ‘arrive’ in our wallet.

Except that really, when we think hard about it we know and understand - nothing has moved anywhere.

Your coins and tokens are where they always were, since the moment they were mined… on the blockchain with all the others.

The blockchain is where they were created, and that is totally tamper-proof (well, tamper-evident, strictly speaking, but tamper-proof for our purposes). You can’t take your bitcoins or your eth or your LCS Cryptoshares and put them somewhere else...

So - what is that you received in your wallet then?

You received access to specific assets on that blockchain, which are now assigned to and controlled by your private key. You can now spend or do what you wish, with that bit of crypto.

I think a lot of the confusion arises because the word ‘cryptocurrency wallet’ is a terrible choice of metaphor. We think of a wallet, normally as the place we keep our actual notes and coins.  Of course, this is now the acceptable term within crypto and we won’t get it changed, but I think it’s really unhelpful and misleading, especially for new users. (It’s as bad as ‘mining’ crypto - don’t get me started on that!)  

To add to the potential confusion further, some wallet programs will only have one private key, and some will have many private keys. And one private key can have either one, or many public keys of its own.  Just remember: private key = keep secret and secure at all times. Public keys can be shared and distributed, for example to request a payment.

It would be much better if the earliest creators of bitcoin had decided to call them keychains or password safes instead, but I guess they had such achingly powerful brains to conceive of these new technologies that they did not consider the confusion that could arise in the minds of normal consumers. So, you have a wallet - but it’s not full of crypto-money, it’s full of keys. These keys identify specific assets on the blockchain, and allow you to control and transfer access to them as you wish.

So the answer to ‘where are my tokens?’ is actually… They’re everywhere! All over the place.

Your public keys are propagated on every copy of whichever blockchain they are part of.

In the case of ERC20 blockchains like LCS tokens, that’s the Ethereum blockchain.  You can see every transaction right there on the chain itself, and you can even run a live copy of it if you want to and be part of the virtual machine. From here you can dig into the transaction IDs and see which public keys are buying and selling to each other, how the allocation of tokens is moving around - and if you do a search (search bar top right, on Etherscan in the browser) for any of your own public keys, you’ll be able to see exactly what transactions you carried out, involving LCS, Ether or any other compatible tokens.

So, if you hold tokens or coins in a range of wallets, then it’s up to you to keep track of all the different keys, and it would probably easier to secure them all one place - but you’re self-sovereign and can choose. You can even leave assets on an exchange you trust, if you want to trade them and keep them handy to swipe a deal (though this is not advised for long term secure storage, it all depends on your intentions and your needs, and only YOU decide and control your keys).

But for now stop worrying about how you’ll get your LCS dividends, when they start being distributed from February 2019. The ethereum blockchain will provide the administration team with a perfect and complete snapshot at the point of calculation. And you’ll get much more information before then, about how to use your dividend tokens.

All you need to do is understand how to keep those private keys secure, and the blockchain will take care of everything else. Clever isn’t it :-)