IOHK | WHY WE ARE BUILDING CARDANO | 06/28/2017    A bootstrap list of sources will be provided by Emurgo, IOHK and the Cardano Foundation. Later this list will be replaced by a community curated list using mechanics derived from Cardano’s treasury system. Our hope is that a reputation system can materialize around good data feeds, thereby creating a positive feedback loop to gradually improve reliability and fidelity. The representation of value is a more complex topic. Unlike information — where once the veracity, timeliness and completeness are established, protocols can behave in a reliable and deterministic way — value is more delicate. Once tokenized, value should behave like a unique object. Information can be copied and passed around, but a token representing ownership of something (say a vehicle title) cannot be cloned and traded on two different ledgers. This act would effectively destroy the integrity of the system. The challenge in legacy interoperability when dealing with tokenized value is that trust assumptions, reliability and auditability change as tokens flow between ledgers. For example, if Bob owns some Bitcoin and then deposits them on an exchange, then Bob now has the exchange’s representation of his Bitcoin on their ledger. In the case of MtGOX, their ledger did not conform to reality, causing the users to lose everything. The problem is further complicated by the need for legacy systems to recognize tokens living in a cryptocurrency. As mentioned previously, businesses are historically resistant to upgrading their software and supporting new protocols. This situation makes it difficult to see a clear solution. For Cardano, our best hope is to provide an option for users to attach a rich supply of metadata to their transactions and then wait for industry standards to emerge to hook into. Some progress has been made with the Interledger workgroup , efforts like R3Cev and international mandates to upgrade old financial protocols. However, the larger challenge remains of quantifying and qualifying value sent from a legacy system to a cryptocurrency ledger. For example if Bob is a bank owner and issues a dollar backed token, then he can always build a bridge to send his tokens to a ledger like Cardano as a user issued asset. While Cardano would track ownership precisely and provide all the features we have come to love such as timestamping and auditability, no cryptocurrency can make Bob an honest banker. He always has the option of running a fractional reserve bank by not backing all of his dollar WHY WE ARE BUILDING CARDANO  Creative Commons Attribution 4.0 International License Page 31 of 44