Digital Asset Tokens: crypto backed by assets!
- The inventor / creator of Ethereum Vitallic Buterin once said Tokenizing Everything was the next big thing
- I think people politely listened and smiled, thinking him a bit eccentric.
- But realityt has a way of catching up with imagination... Steve Jobs was a great example.
Digital Asset Tokens
- These are cryptocurrency tokens
- These are NFT tokens
- These are also Security Tokens offered through a Security Token Offering.
- A Security Token Offering is very different from an ICO or Initial Coin Offering, as ICO are backed by hopes, dreams and big ideas. While STO are backed by hard assets, yep, hard assets like art, real estate, gold, treasury bonds or even debts.
How are these made?
- These are created as the digital manifestation of ownership in a real asset, which is held by a custodian.
- First the asset is tokenized by minting a NFT token or NFT tokens which represent ownership of the ownership papers of the asset or the company which owns the asset.
- Then an cryptocurrency token which represents ownership, whole or fractional is created or minted, then it is sold on a special exchange, which only sells to known customers who fulfill certain qualifications, according to the country the token is created in and custodied in...
Why? Liquidity, Diversification, Security
Liquidity
- Real Estate is the most valuable asset class in the world, but it's illiguid..as hard to convert to fiat like US Dollars.
- But with tokenization it can be sold quickly, thus easily converted to Fiat.
Speed
- See the above
- The conveyance or sale of Real Estate is a sometimes tortuous process, which takes months if not years for bigger projects.
Diversification
- If you have 1000 or 1,000,000 dollars to invest in Real Estate, you usually end up putting all your money into one real estate investment, and if the property doesn't appreciate in value you end up with a poor investment.
- Real Estate Tokenization allows you to invest smaller amounts, and thus in more projects, so your investment capitol is spread around or diversified.
Security or Store of value
- We all love Bitcoin in this space, but it's volatile and really not a short term store of value, and if you buy at the top of the bull market, it really isn't a store of value.
- But Real Estate tends to be less volatile, and a better store of value.
I think the time is right for Digital Asset Tokens...
- Yep I think the world of crypto is ready for the next big thing, even if the world of crypto looks like a toilet with one poop after another.
- I think this because in contrast to all the tokens and investments many invested in this year, and loss their capitol, security tokens are backed by real assets. And real assets value nearly never goes to zero.
Summary..
- This was meant to be just a taste of this topic, a snack if you will...
- I will write more in the coming days, so if you are interested stay tuned...
About @shortsegments
Shortsegments is a writer focused on cryptocurrency, the blockchain, non-fungible digital tokens or NFTs, and decentralized finance for over four years.
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