Few realize that almost everything of value will eventually be tokenized. That is because, thanks to blockchain technology, asset tokenization can be efficient, secure, it can provide for peer to peer transactions, fractional ownership, and it provides the tools to democratize all markets. This leads to the question of what sorts of assets should one tokenize on the blockchain?
Before we get into that, it is important to provide some context. Bitcoin has revolutionized how people view money and it has led to an entirely new market – cryptocurrencies. Despite this, I am convinced that the more revolutionary part about this invention is its underlying technology, that is blockchain technology.
A blockchain is a distributed ledger that is shared among computer networks for maintaining a secure and decentralized record of transactions. Blockchain technology provides for trust in the ledger without the need for third party.
Digital assets, such as contracts, images, music, etc can be added to a blockchain and can be transferred and/or traded similarly to how cryptocurrencies are transferred and traded. This opens up an entirely new universe for digital market for assets of all kinds, especially when you consider all sorts of securities can and eventually will trade on the blockchain.
The digital assets market will account for trillions, if not quadrillions, of dollars.
Unfortunately the Bitcoin blockchain wasn’t designed to handle assets, thus tokenizing assets on this blockchain comes with significant challenges. Similarly, Ethereum and other blockchains can be adapted to handling assets, but because these protocols weren’t designed for this purpose they can lead to significant inefficiencies, high costs, and security challenges.
A few blockchains have been designed with asset tokenization in mind. See Which Is the Best Tokenization Crypto?. Chief among them is Ravencoin, which is a fork of Bitcoin and was designed specifically for the purpose of asset tokenization, including the handling of digital securities (i.e. stocks). One key feature of Ravencoin is that it provides a solution to overcome the AML/KYC risks associated with securities and the issuance of STOs (Security Token Offerings).
What Are The Best Assets to Tokenize On the Blockchain?
- Stocks
- Real estate
- Debt
- NFTs
- Vehicle and land titles
- Businesses and business entities
- Crypto mining farms and mining Power
- Farms, forest, carbon credits, mines, etc.
- Sport teams, race horses, race cars, etc
- Books, intellectual property, patents, etc
- Car rentals and mobile services
- Luxury Goods Like Cars, Wine, Cigars, etc
- Precious metals, collectibles, historical items, etc.
Stocks
Eventually all stocks will trade on the blockchain. Earlier this year, Intercontinental Exchange Inc., NYSE’s parent, purchased a stake in tZero, a marketplace to trade private digital securities. tZero provides a trading system, which uses blockchain technology, where private and public entities can choose to list digital versions of their stocks. See NYSE Owner Gets on Board With Crypto-Powered Revamp of Trading.
Real Estate
Companies like RealT already provide investors with the opportunity to buy fractional, tokenized residential properties in the US. And companies like Market Space Capital is doing the same with multifamily developments. See interview with Sohail Hassan below.
In addition, smaller companies such as Hydra Chain Technologies and Dwell Homes Inc are jumping in this emerging market. Through their partnership with DigiShares, these two small companies are planning to tokenize single family residences in Wisconsin and Illinois, USA.
Real estate tokenization is expanding to all parts of the globe. Outside of the US, companies like BRIKbc Projects are tokenizing luxury residential real estate properties in Brisbane, Australia (home of 2032 Olympics City). Thus, providing access to real estate in hot markets for as little as one Property Token (under US$100).
Debt
In the simplest terms, blockchain technology can be used to tokenize debt to the point that traditional financing could become a thing of the past. Imagine raising funds for a business through peer to peer platforms and completely bypassing banks, while maintaining the right level of security and meeting all regulatory compliance.
Nevertheless, it is likely that the biggest users of debt tokenization will be the financial institutions. See J.P. Morgan’s Onyx Has Tokenized $300B of US T-Bonds So Far
NFTs
A few years ago, it was impossible to imagine that the Non-Fungible Token (NFT) market would grow as much and as fast as it has. According to Skyquest, the Global Non-Fungible Token (NFT) Market is expected to reach a value of USD 122.43 Billion by 2028.
Some argue that NFTs are a passing trend, but the reality is that NFTs can have real value and can combine with other forms of asset tokenization in multiple ways.
NFT Use Cases
- Art
- Music
- Gaming
- Fashion and wearables
- Events and ticketing
- Social media
- Metaverse
- Virtual land
- Digital identity
- Fantasy sports
Vehicle and Land Titles
There is no reason why vehicle titles, land titles, and any other titles or similar instruments can’t be tokenized. Titles stored on the blockchain make ownership transparent, secure, verifiable, and recognizable by local and global economies.
Medici Land Governance, an Overstock.com subsidiary has been using blockchain technology for a few years to support land governance, titling, and administration with a secure public record of land ownership.
Businesses and Business Entities
When it comes to tokenizing a business, this often means tokenizing the legal entity owning the business. If you want to tokenize a restaurant and the restaurant is owned under the entity Restaurant LLC, then most likely way do so is to tokenize the entity named Restaurant LLC itself.
The bottom line is you can tokenize any business!
Crypto Mining Farms and Mining Power
Cryptocurrency mining in large scale requires significant expenditures, especially when mining Bitcoin. Not surprisingly, companies like RenewaBlox, the worlds first exclusively renewable, immersion cooled, Bitcoin mining farm is planning to tokenize their business using the Ravencoin blockchain.
Tokenize Farms, Nature, Forests, Carbon Credits, Mines, etc
Farms of all types, anywhere in the globe can be tokenized. This could include livestock farms, fish farms, market gardens, orchards, vineyards, etc.
Additionally, forest of all types can also be tokenized. In fact, I’ve personally been exploring the idea of tokenizing timberland for the purpose of delaying clearcutting. This is an alternative form to selling carbon credits. It is easy to see how carbon credits will eventually be tokenized.
See Single.Earth Raises $7.9M Led by EQT Ventures to Tokenize Nature. According to their website, Single Earth is a platform that tokenizes nature for its ecological value – carbon sequestration, storage, and biodiversity.
Then there’s also Sustainable Impact Token (SIT), which utilizes algae biomass to generate tokenized carbon credits.
Sport Teams, Race Horses, Race Cars, etc
Companies like My Race Horse and The International Racehorse Owners Network (IRON) want to allow the general public to have fractional ownership in horse races. This can be new and exciting for race horse fans, but also can open new financing opportunities for horse owners, trainers, etc.
Books, Intellectual Property, Patents, etc
Late last year, True Return Systems LLC and Accu 2.0 LLC were seeking to auction US Patent No. 8,538,860, as an NFT, with a starting bid at around $7.5 million. This is believed to be the first patent auctioned as an NFT.
Car Rentals and Mobility Services
Asset tokenization has the potential to disrupt the car rental industry and mobility service providers like Uber and Lift.
In late 2020, Fetch.ai announced the launch of Mobility Framework. Fetch aims to provide decentralized mobility service solutions to local economies, delivering a hyper-local service through a common user-focused experience.
Luxury Goods Like Cars, Wine, Cigars, etc
The luxury good market is prime for asset tokenization. It is easy to imagine a world where luxury goods can be represented by a unique token that can also serve to trade (either whole or fractionalized), provide authentication, and even track the history of each unique item. Below are a few examples.
Late last year crypto startup CurioInvest began selling tokens for a limited-edition 2015 Ferrari F12 TDF. The car was originally valued at around with a $1.1 million. See When Ferrari? Tokenized Supercar Gives European Investors Exposure to Asset Class.
Vinsent, an Israel-based company combines blockchain technology with the concept of “wine futures.” Each wine bottle has its’ “token,” residing on the Ravencoin blockchain.
Conclusion on The Best Assets to Tokenize On the Blockchain
Above are just a few examples of the best assets to tokenize on the blockchain. The fact is that you can tokenize almost anything, including gold, gold bars, gold coins, silver, and other precious metals. You can tokenize collectible items, historical documents, important documents, etc. In fact, anything that benefits from a barcode could probably benefit in some way from tokenization.