Tokenization of assets: a promise of a massive change in the financial industry.

Tokenization of assets: a promise of a massive change in the financial industry.

We are at the beginning of the 4th industrial revolution. Technology is profoundly transforming our lives. The combination of innovations such as artificial intelligence, internet of things, robotics, and blockchain, will pave the way for this revolution. We are experiencing technological changes that will alter the way we live and work on an unimaginable scale in the coming years.

There is one particular technology that catches my attention, and it’s blockchain, this technology promises to give authenticity, trust, and equality of criteria, through a consensus protocol, in global and decentralized environments.

Thanks to this technology, we can tokenize, any right, asset, stock, commodity, intangible asset, a legal association, or agreement. All of these assets will be able to be represented, tested, and transferred with a digital token.

But, what is asset tokenization?

Tokenization is the process of converting assets into tokens that can be registered, exchanged, and stored in a blockchain system. That may sound quite complex, but I assure you it is not that difficult.

To keep it simple, tokenization converts the stored value of some physical object, such as a car, or an intangible object, such as a credit, into a token that can be handled throughout a blockchain system. One could tokenize, for example, a piece of art, a real estate asset, a car, gold, a barrel of petroleum, among others. In short words, any asset that you can imagine, the sky is the limit.

What advantage does this bring?

There are many advantages that the tokenization of assets can bring to the financial industry. The most often mentioned are the reduction of administrative work, the decreasing of costs by the removal of intermediaries from the process, much faster asset transfers, and the availability to trade them 24/7 from anywhere in the world.

by Yann Gourvennec

Also, this technology allows you to have fractional ownership of an asset; for example, you can own a fraction of an art painting by Claude Monet. Which will lead to higher liquidity and accessibility to very illiquid assets as well as helps to democratize investments. This kind of assets will become easily transformable in money and will allow a more significant number of people to participate in their returns due to the reduction of the investment of entry. However, this is not something new, but it certainly simplifies the whole process.

It offers some advantages to the real estate market as well. In addition to those we have named above, the use of smart contracts will enable to automate the change of ownership of a house once the payment has been made. Also, once an investor acquires a token, no one can erase (or will be extremely difficult) the ownership information because it will be added on the public blockchain making it immutable and transparent.

Disadvantages

Many of the advantages will not be possible without major social, legal, and technological changes that could take a long time and resistance to be adopted from unprivileged sectors.

Even though the third parties are removed, it’s necessary to create a new regulatory framework for this kind of activity.

Blockchain technology is still its early stages, so I believe it’s still not prepared for a massive enter of a vast market as the real estate is. It’s necessary to keep developing this technology.

Conclusion

Tokenization is a promise of a massive change to how we see things nowadays. It allows us to buy and sell all kinds of assets while democratizing the process of owning it.

France is taking a step forward in Europe by beginning to create regulatory frameworks for this type of activity. The AMF seems really interested in regulating it. You can check the recent “Loi Pacte” law that has been approved.

Blockchain offers an exciting alternative to the financial market and a unique way of owning a part of an object such as a car or a painting. Little by little, this will begin to change the way we take ownership of things.

Tokenize the world!

Sources:

https://medium.com/@credits/tokenization-of-financial-assets-financial-blockchain-revolution-bc632e75c8

https://hackernoon.com/tokenizing-assets-for-dummies-20cb7ccccbb

https://medium.com/mvp-workshop/tokenizing-real-estate-what-are-the-benefits-pitfalls-and-misconceptions-of-tokenizing-assets-86d90f8ef3b

Could “dApps” be a game changer?

Could “dApps” be a game changer?

If we ask a group of people what WhatsApp, Instagram or Snapchat is. They will answer the same “Applications.”

As we know, an Application is a computer software program created to be launched on mobile phones, computers, and other devices. These applications can perform particular tasks of any kind, be it entertainment, socialization, among others.

Nowadays, applications are more present in our lives than ever. Apps such as Facebook, Snapchat or Instagram can be found in millions of smartphones around the world, and people spend hours a day using the services they provide. Nevertheless, there is something in common in all these apps, and it’s that they are “centralized.”

What does it mean centralized?

Centralized applications rely on a central organization or company, which decide everything about these platforms without asking or considering their users. For example, Facebook, Instagram or Twitter are apps that are hosted in a central server making the data more susceptible to attacks and also could be used as they wish.

The opposite happens with the dApps. However, what are they?

The word “dApp” stands for Decentralized Application. It’s a software created through smart contracts in the blockchain and does not depend on a central entity, but relies on the community of users that use it. It can be a mobile app or a web application that cooperates with a smart contract to carry out its function. This is the definition that people give it today, but in fact, dApp means ‘no servers’ and P2P existed way before blockchain appeared.

If you don’t know what a smart contract is I will explain it briefly: Let’s say that it’s a computer program that executes itself when the conditions that were programmed in its code are fulfilled. If you want to know more about it, you can check on one of my colleague’s articles that speak about smart contracts & the ethereum blockchain.

Bitcoin is considered as the first blockchain dApp. It was very innovative when ten years ago they create a digital currency that could transfer value without intermediaries using a system of open source, p2p network, and cryptography store records.

After developers start seeing that blockchain technology could be useful not just to exchange value but for digital data too, in 2014, with the instruments and with the writing language of Ethereum Solidity, they begin to pave the way for the dApps that we know today.

Nowadays many projects allow creating dApps in their ecosystem. The most famous is Ethereum, and there are many others like EOS, NEO, Qtum, Tron, among other projects.

I truly believe Decentralized Applications will be everywhere soon. Let’s take advantage of knowledge from previous experiences. What happened with the world wide web years ago? At the begin of the ’90s no one would have bet on it, nowadays the whole world revolves around it. It’s quite simple to have an idea of what blockchain will be as we move forward and when we become aware of the powerful technology hidden behind.” Mathieu Lecoq, dApp Developer.

The architecture of an App & dApp

In the structure of the apps, both centralized and decentralized, there is what we name the visual part recognized as “Frontend” and the server part known as “Backend.”

To explain it easily, the frontend is the visual section of the app, that is “what you see”. For example, when we start a mobile app or a web app, we can tell that what we are seeing is the part of the user. This part is called the “Frontend” and correspond to the visual interface of an app.

Alternatively, the section of the server is the one that “is not seen” is called “Backend” — every data, storage space, and so on. In short words, all that cannot be saved in the mobile app or on the website.

In this stage is where these two differ. A native application will be structured in this way app = Frontend> API> Database. However, in a blockchain dApp, the main difference is that in place of an API that plugs to a database, it has a smart contract that is linked to a blockchain. dApp = Frontend> Smart contract> Blockchain. The most famous dApps are CryptoKitties, Decentraland, Augur, and OpenBazaar.

Advantages & disadvantages of a “dApp”

The main problem for decentralized applications is that they still don’t have a structure that allows them to work without any server at the moment, mainly due to scalability problems. DApps still have to trust on servers for some tasks, but the protocols grow as we learn.

Cryptography has been used for years, but it has never become a standard with protocols when it comes to generic data, that’s the game-changing part. The decentralization will allow to “centralize” the data without any server. The whole organization of our society can be reviewed with blockchain, and that is why history repeats itself. We are in turn towards web 3.0, and we won’t have to wait 30 years to see the changes in our daily lives.” Mathieu Lecoq, dApp Developer.

dApps have a bright future.

In a data-driven world, our experience as internet users is now shaped mainly by the influence of the big five guys of the block that are Microsoft, Google, Facebook, Apple, and Amazon. DApps can make a real change by giving back to internet users the control over their data.

Many corporations, governments, and not-for-profit organizations are looking for blockchain technology, mostly because this is the best way to remove third parties, brokers, reduce fees, save time and other resources in the process.

Even though dApps are still in its infancy stage, I believe it’s a space to keep an eye on it.

Special thanks to Mathieu Lecoq for the insights. If you want to know more about his project take a look to Birdploy is a crypto assets management platform that allows anyone to understand, play, launch projects and try to bring something new from scratch in the Ethereum Blockchain.

Could “dApps” be a game changer?

Hyperbitcoinization in Venezuela, could bitcoin replace the national currency?

Venezuela has been in the headlines for many moons because of the social, political and economic crisis that is going through. There are continuous protests, shortages, and hyperinflation. For this last reason, the demand for bitcoin (BTC) and other cryptocurrencies has boomed in this country. Venezuelans see them as a solution to inflation.

Quick history

Since 2003 Venezuela has implemented a tight currency control policy that means that any person or company that wanted to exchange their bolivar’s (Venezuela’s official currency) to a foreign currency must turn to the government for permission and the exchange rate. Otherwise, they will have to go to the black market where the rate is much higher.

Maybe you are picturing a hard way to find dollars but is not as bad as it sounds: it is as simple as checking the price of the black market dollar on a website and posting a message in your Facebook wall saying that you are buying or selling dollars. Eventually, somebody will come and agree to do the transaction.

However, inflation has skyrocketed. Hugo Chavez (previous president) in 2007 took three zeros out of the currency, and the current economic policies of the government have led the currency to devalue by 90%, eliminate five zeros and rename the currency to “Bolivar Soberano”.

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