What do you think about tokenization of assets?
Is it way to early to expect all assets to be traded via DLT(Blockchain)in the next 10 years or are we jumping the gun expecting a digital revolution to happen overnight?
What do you think about tokenization of assets?
Asset tokenisation is very much here to stay I think. Generally it’s beneficial as it provides a cheaper, faster and more liquid alternative to traditional asset management.
If you were to invest in high art or classic cars previously you’d need to buy the asset outright, not many of us have the purchase power to do this, but tokenisation enables anyone to buy a fraction of the asset and benefit from its appreciation (or not😉).
You could even tokenise your future earning potential by selling the partial rights to your expected future salary, expect many in sports to do this.
Even buying a fraction of commercial property where you’d benefit from rents,service charges etc is possible.
Your 10 year timeframe is probably not to far from the mark @JonPynkster I think, at least a big proportion of asset transfer will be concluded this way by then.
I don’t know that “all” assets will be traded digitally but I agree that a large portion will be available to trade digitally. 10 yrs is not a stretch.
I’m not so informed about this topic so take this just as an opinion, I think that there is way to many things that people want to tokenize right now and I don’t see the benefits of that, especially with not so much security provided by institutions.
For the examples that @stackem said I see a lot of downsides and not so many upsides.
I don’t see sense in tokenizing high art and classic cars or other exclusive/rare assets in a big scale, those things are not sold on fixed price, you need to negotiate to get the price that everyone is happy with and people usually want those assets in their garage, on the wall or in a safe room so people could admire it and to remain exclusive so the price stays high. Also you need to see if the car is working like it should, is the painting real,…
It seems very expensive to check all of that so you can invest a small amount of money into that. You would also need to pay for storage of that asset and maintanace.
And on top of all that those assets are not very liquid but tokenization could make them more liquid.
Properties with a bunch of owners seems like a nightmare even if they are blood related, agreeing on rent price, sell price, decorating…
Don’t know which assets are good candidates for tokenization in a way that we can trade them like bitcoin or similar, bonds came first into my mind because they are expensive and you know every information about them upfront, I’d need to go deeper into the topic.
I think the plus sides weigh in favour of tokenisation…
They are cheaper as your not going through third parties, but smart contracts.
Better liquidity in order to trade in/out
Possible more transparent in operation
The assets are securities and would come under securities law and offer the same protection of regular assets.
I get where your coming from as regards art etc, but I think it’ll still be a popular option.
I’m guessing with property when you settle up your entitled to the NAV, (if it works like a fund?)so maintenance etc has already been deducted.
It’s hard to think of anything really that couldn’t be tokenised, what does anyone else think?
Hi guys! Lately I put lot of research over tokenization of assets because i think it will really goes to change the way we hold trades today.
There is the Coinfield company in particular that grab my attention with its Sologenic project.
They really plan to tokenize ON DEMAND every existing asset with a very wide range of possibilities.
In general I agree very much with what Greg @stackem says.
With tokenization of assets, finance will be faaaaar more liquid than what we experience today, with also the possibility of actually spend franctions of the assets we hold for our daily shopping.
As far as many are claiming we could already see some good change in this direction in the next 5 years…so in 10 years @JonPynkster it seems very much possible even if things are a bit
This is still a developing concept and it will take time to be embraced by all. Probably in the next 5 to 10 years all things being equal.
I found this piece on Medium about Fractional Investment, following on from this tokenization thread.
I’ve noticed you can buy “slithers of stocks” on the Cash-App, widely used in the US but it seems buying fractions of a stock is the next big thing that Millennials in particular are exploiting.
If you get to the end of the piece it touches on actual tokenization, insightful and well worth 10 minutes read.
I’ve heard a little about this also @stackem . I guess one of the benefits will be, if an investor has a set amount of money to invest each month, it can help them stick to their budget…
Sure, and I think you can set up Cash-App to make recurring purchases of your chosen stock too so you can budget easily, unless that’s only BTC that you can set this up for, it’s not fully available in the UK yet, shame
This is a really interesting article about real-estate tokenization.
If I don’t go wrong Polimath has partnered with Cardano for his tokenized platform…thanks for the link @JonPynkster!!
Cardano, slow burn on this one. I think it’s going to be the number one contracts platform in the future! Awesome team.
Yes, @stackem Cardano has been on my radar for a while now, not invested yet , but it was inevitable partnerships and rebrands had to happen within the crypto space. I see this process as a sign of a maturing market. There is a considerable way to go to achieve usecase status as most projects just don’t have a market yet. @Tradelta Polymath is rebrandig this year after the mainet launch some say it’s the ethereum of Security Tokens (STO). Both project are worth watching.
Hi @JonPynkster! In the article i linked it is clearly stated :
According to Polymath, Ethereum lacks regulations and compliance, making it better suited to enable “unstoppable applications”. By contrast, Polymesh is being built from the ground up, taking in mind certain considerations to ensure that it will eventually become the underlying infrastructure for the world’s capital markets.
“After co-founding Ethereum and Cardano, two of the most widely used blockchains in the world, I am looking forward to working on Polymesh. There are quadrillions of dollars of financial securities, and building a blockchain to secure them is an incredibly exciting task,” said Charles Hoskinson, co-founder of Ethereum and founder of IOHK and Cardano.
As far as i know nothing changed from there…ETH is a great project but I think they have to solve those scalability issues…hope they achieve the goal!!
@Tradelta It’s going to kick off after the 2020 elections in November. Depending on who wins; if Trump wins, they’ll be a long protracted fight that will see a new system emerge as the traditional system based on rent seeking, and cannibalization of failing industries finally eats itself . This is at the heart of the US/China trade war as companies like Huawei move into tech markets with efficient, reasonably priced, high quality products that compete with the likes of Apple’s Iphone. This will cause an emplosion that will usher in a new tokenized financial system. If the Democrates win ( Biden or Sanders, either will do) they will want to maintain their millennial support and shake-up the current system by supporting new technologies in finance ( Fintech and Defi).
My prediction is geared towards something along the lines of what happened in 2017 with the ICO boom. However, STOs by nature are compliant and need only to deliver products that can be tokenized and traded on traditional markets. The future is bright in the sector as institutional money now needs alternatives to what is a bottlenecked failed system.
Breaking investments into fractions is the protocol that Bitcoin and Altcoins use (via, DTL or Blockchain) for peer2peer banking , the only difference is that STOs have to be castodial to protect the small investor and satisfy the SEC regulatory obligations.
So there’ll be a two tier financial system:
System 1. Regulated, Castodial and Trust Based
System 2 . Unregulated, Disruptive and Trustless.
There will be a gateway into the Fire sector of markets and this is where Defi ( Decentralized Finance) comes in. The advent of Dapps ( Decentralized Applications) like, yours truely PYNK and Cashapp is going to forge a wave of young tech-savvy investors into a market based on transactions made on the move from smart devices . These transactions will be smaller, longterm to shorterm investments without compulsory lock up periods. Basically , the investor will have a choice on how long they want to commit to a product.
I see investors moving in and out of both systems based on individual exposure to high volatility, extreme risk to high reward dynamics. In the end the traditional markets won’t be able to compete with System 2; as the nature of this new market will be driven by multiples of micro-investments, from cash-strapped, small investors looking to make 100x profits from $50 to $100 initial investments.
It’s going to be like a typhoon the size of Australia hitting the traditional markets, all the Whales will find themselves sucked up by the winds and dropped into a lake ( System 2.) full of ravenous piranhas’ ( small investors) who will eat the whales to the carcass.
Well, @Tradelta that’s just my dream
Go Polymesh and Cardona !
It seems that you painted a pretty detailed picture about the future in your mind, man! I like it!
Gogogo System 2!!!