Tokenized securities for a globalized market
“Change is inevitable,“…progress is optional”-Tony Robins. Our world is a place in constant change.We have seen changes in customs, canons of beauty, language … and what has value for us. First civilizations replaced barter for commodity money, such as shells, cocoa beans, salt and later, precious metals, from which ﬁrst coins were made of. Thousands of years later, the ﬁduciary money appeared. This kind of money has no value itself. His value lies in the conﬁdence of people to be able to exchange it for goods or services.
Since a few decades ago, technology is transforming the world in a radical way, aﬀecting all spheres of our life, including economy and ﬁnances, which do not escape from its expansive wave. We are spectators of a possible great revolution due to the appearance of Blockchain, cryptocurrencies and tokenization. All of these are alternatives to traditional money, whose main characteristics are decentralization, immediacy, and no intermediaries, which means, that is , they are not controlled by banks or governments.
Blockchain works like an open book of accounting where all the transactions of cryptocurrencies and tokens are collected. The transactions are made directly between the sender and the receiver without the need of a third party, and always keeping their anonymity. The cryptocurrencies are money in purely digital format, whose maximum exponent is Bitcoin, although today there are already many types.
The concept of token is a little more complex. A token is a unit of value issued by an entity to be used exclusively in its environment. Also, it has the value that each entity wants to give it. It would work in a similar way as the casino’s tokens. Casinos emit chips that only have value within the own casinos. The tokens we are talking about are purely digital, they use an existing Blockchain and they do not have to be just money, because, in fact, any asset can be tokenized. For example, if a person has a milk company, he or she can oﬀer tokens equivalent to ﬁve liters of milk. Another application tokens may have is to be exchanged for a service. Crowdvilla company does that. It oﬀers consumers tokens that they can use to stay in holiday homes in diﬀerent parts of the world of the own company’s portfolio.
It is a very interesting concept because many companies are beginning to use tokens as a means of funding. This is known as ICO (Initial Coin Oﬀering). Investors buy tokens with the hope of being able to sell them in the future when they revalue their price. This kind of tokens are called security tokens. Also, investors can buy tokens with the hope of being able to exchange them for a product or service oﬀered by the company when it grows, which are called utility tokens. There are companies that achieved a very high level of funding using this system. For example, Brave, a company that launched a web browser with the same name, managed to raise 35 million dollars in just thirty seconds using this system.
Another economy area that tokenization has the potential to revolutionize is real estate. Tokenization could lead real estate to a liquidity that they lack today, since they could be bought and sold more easily, and the real estate market would open up to global investors, since anyone with Internet access could buy them. Nowadays, real estate have a reduced market, because it is necessary to have a quite big amount of money to be able to buy one. Nevertheless, tokenization allows the owners to sell “chips” of their property. Because of this, it would not be necessary to have a very high capital to invest in them. The property is divided and each part has a particular value, represented by tokens that can also be exchanged.
As explained above, any value is likely to be tokenized, including talent. There are already companies that tokenize the talent of young athletes, such as TokenStar. The idea of talent tokenization would be to invest in people who are not yet well known, but have great potential to succeed.
Will blockchain technology represent a revoluti on that will transform our economy? Are we moving towards tokenization of all things? Will the cryptocurrencies stabilize and become accepted as a means of payment or will they remain for mere speculation? Only time will answer these questions, but one thing is clear, these concepts are already part of our world, and we must understand them and try to take advantage of their beneﬁts.