What is asset tokenization

The tokenization of assets on the blockchain is quickly becoming the hottest trend in financial markets as previously unavailable investment sectors open up to small investors. How is this possible and what is the tokenization of assets? Keep reading to find out!

Imagine you have an expensive and unique item that is difficult to sell, such as a legacy piece of art. These assets are considered illiquid because they require time and resources to be sold to the right buyer at the right price. To release your cash, i.e. sell the artwork, you need to find an interested art collector who has enough funds to purchase it in full. 

Obviously, there won’t be many people who meet these criteria and therefore you won’t be able to sell illiquid assets quickly; not without significant loss. But what if you could  digitize and divide your real estate or artwork, and sell parts of it to people all over the world, like selling shares in a company? Maybe you could only sell part of it, enough to get the fund you need now? 

Let us take another example. The real estate sector remains one of the most stable and profitable investments despite the crisis of 2009. And yet anyone wanting to reap the benefits must invest substantial sums to purchase the entire house, plus transaction costs and costs. notary fees. You can’t invest a few thousand dollars in just a square meter or two, nor can the owner sell you only a small part of their house. Or can they? 

Tokenization of an asset is the issuance of digital tokens that represent ownership of an asset, such as a work of art or a house. Instead of looking for a local buyer interested in a rare or expensive item, asset owners can sell their assets symbolized – IEO or STO to many small investors worldwide, in whole or in part, in various customizable contractual conditions .

At the same time, retail investors can enter markets previously reserved for large players and seize lucrative opportunities at a low minimum investment threshold and negligible transaction costs. 

How does asset tokenization work? 

Blockchain technology is primarily known for trading bitcoin and cryptocurrency. However, it has many real-life applications from delivery system management to asset tokenization. 

The blockchain is a time-stamped, immutable digital ledger, which means it is tamper-proof and can be eternal proof of a transaction. For the purposes of this article, we are focusing only on decentralized public blockchains as they are at the heart of the blockchain movement and the Vave’s philosophy.  

Using pre-designed smart contracts, we can embed information into the blockchain, in this case the details of asset ownership. While it may seem daunting, the process can be as easy as a few clicks when using middlemen. Most tokenization portals include not only scanning and token issuance services with carefully audited and standardized smart contracts, but also access to asset exchanges and a global network of investors, allowing exchange of information. ‘instant assets 24/7. 

What Can You Tokenize?

In essence, you can symbolize almost anything from a real-world object to your virtual objects, and maybe even your own work or future ideas, as long as you can create a legal representation of the property of these assets. 

In practice, tokenization is more useful for traditionally illiquid assets such as high-priced real estate, works of art and collectibles, or materials sold in traditional markets in extremely large lots, for example, base metals. 

Tokenization allows for the divisibility of substantial assets which can then be sold in part or in whole to various small investors.  

Is tokenization safe? 

Almost anyone can symbolize assets or buy tokens online, but the question is how to ensure that digital tokens represent real assets. At this point, we still need trusted third parties Vave and their Legal Team, to audit asset ownership and ensure tokens are backed up.

As with everything, it is prudent to always do your due diligence and ensure that the platform you are using offers existing assets and compliant trades, for example, through KYC / AML vetting of investors. 

Buying and trading tokens on external exchanges or secondary markets comes with a set of risks, and you need to keep your passwords and secret keys safe to maintain access to your assets. In the blockchain, your asset is not attached to your identity per se but to your account held by a private key, so the loss of keys can mean the loss of assets. 

Legality of contracts and administrative formalities

Most tokenization portals, including Vave, offer bespoke smart contracts audited by an expert legal team. Our team also checks the legal documents related to the ownership of the asset, to ensure that the owners have the right to symbolize and sell their items. 

In your digital wallet, the token is a representation of ownership of your asset, with the contract terms encoded. 

Additionally, at the time of purchase, the transaction between you and the seller is time stamped and integrated into the public blockchain and serves as further proof of your asset ownership until you sell or trade. 

Tokenized assets must comply with local regulations in many geographic jurisdictions, as tokens are sold to investors around the world. Terms of sale are often included in smart contracts and tokens as some investors may be excluded from the purchase due to their local laws i.e. US citizens. 

Advantages of tokenization / Advantages

For asset owners:

1. Unlock illiquid and hard-to-sell assets. 
2. Get instant access to 24/7 trading and a global network of investors. 
3. Divide the assets and sell a fraction of the property. 

For investors:

1. Access high performing industries with a low barrier to entry. 
2. Trade assets quickly and with low transaction fees. 
3. Buy a fraction of the high priced items. 

Tokenization negatives / Cons

• Tokenization requires document audits on third-party assets. 
• Ownership is linked to your online credentials (i.e. private keys) rather than your personal identity. 
• Assets lost through phishing or the loss of private keys are often unrecoverable. 

Hearing the word “cryptocurrency”, many people immediately think of Bitcoin. And indeed, Bitcoin is the oldest and most famous of the cryptocurrencies available on the market. But this is hardly the first form of digital money or even the first blockchain. Let’s dive in and review some history and facts about cryptocurrencies and other  blockchain-based assets  . 

What is cryptocurrency?

Banks offer a digital version of fiat money. We meet them whenever we transfer money or pay by card, but these are not considered cryptocurrencies. According to the definition  added to the Merriam-Webster dictionary only in 2018, cryptocurrency is any form of currency that exists only in digital form and has no central governance or issuing body, for example, a government or a central bank. Instead, decentralized systems and cryptography are used to issue new cryptocurrencies, record transactions, and prevent fraud and counterfeiting. 

History of  Digital Cash

In 1982, David Chaum, a famous cryptographer, conceptualized what he called electronic money, where digital money obtained from banks could be spent without central oversight. He then executed his ideas as  DigiCash  which survived until 1989. His research was invaluable for what we think of today as cryptocurrency. He also became a mainstay of the Cypherpunk movement, which came to life in the late 80s and 90s. 

Cypherpunks were a group of people actively interested in cryptography, privacy, and independence from centralized systems and governments. The group converged around an anonymous mailing list where they exchanged ideas for advancing research in the areas of privacy technology and cryptography. It is widely believed that their conversations and experiences gave birth to the concept of blockchain and Bitcoin currency   as we know it today. 

Bitcoin from yesterday to today

In 2008, a famous Bitcoin white paper was published by an entity or group calling themselves Satoshi Nakamoto. The white paper described new technology and the ideology behind cryptocurrency. Bitcoin was formed as a bank and government independent “peer-to-peer electronic payment system” operated by a decentralized network of computers called nodes. Anyone can configure a node by downloading specific software and joining the network. Over the next 11 years, Bitcoin reached a market cap of $ 147 billion . At its peak value in December 2017, each Bitcoin was worth over $ 20,000. Currently in a bear market the value is hovering around $ 8.2k, but many believe the coin is just starting to rise. 

How cryptocurrencies work

According to definitions, cryptocurrencies require decentralized systems and cryptography to play the role usually reserved for banks and governing bodies. The system is designed to control and encourage the execution of valid payment transactions and the issuance of new coins. There may be different ways to create such a system. Most, but not all, cryptocurrencies rely on the underlying blockchain technology. A distributed peer-2-peer node network executes the payments and places the coin’s ownership records on the blockchain. Bitcoin, Ethereum, or EOS are examples of blockchain-based cryptocurrencies. There are also cryptocurrencies that do not use the blockchain, for example IOTA. 

Blockchain in brief

Most cryptocurrencies, including Bitcoin, are based on blockchain technology. Blockchain is essentially a chain of digital blocks, linked to each other in a specific sequence. Like a folder in a database, each block contains data. For the use case of cryptocurrency, the blockchain contains records of financial transactions and proof of ownership of the crypto-coins or other assets. This is one of the reasons why blockchain is often referred to as a digital book. 

Distributed ledger technology

Blockchain technology is often referred to as DLT for distributed ledger technology. Financial records contain proof of ownership and transaction information. Traditionally, they have to be validated by central authorities, which is both expensive and time consuming. They can also be falsified and subject to human error. Records stored on the blockchain are more secure from both outside and inside influence because they are immutable, time-stamped and distributed. 

• The advantages and methods for time stamping digital documents were first described by Haber and Stornetta in a  groundbreaking  1991 document . Accurate time stamping is vital for financial documents. It allows us to track the ownership history of the asset. 
• Immutability means that no one can modify the records stored in blocks. Thanks to the hashing algorithms used in cryptography, each new block in the chain contains a digital fingerprint called a hash. Each block also bears the digital imprint of a previous block. Any change in the data in a block would produce a completely different hash and the modified block would break off the chain. 
• Finally, the digital blockchain ledgers are distributed, which means that a copy of the records is stored on many computers around the world (on a distributed peer-2-peer network). It secures data against cyber attacks and data loss, which happens for centralized systems with simple points of failure. This is why we often call the DLT (Distributed Ledger Technology) blockchain technology. 

Who makes crypto work?

Blockchain technology allows us to easily send money to our peers. But if the banks are not involved, who checks to see if the payments are correct? Who puts the records on the blockchain?

The validation of transactions is done through the so-called consensus mechanism. Before a transaction ends up in the block, the majority of nodes must agree that the payment is correct and valid. Each blockchain uses a different method to achieve such consensus. Various game theory principles and incentives are used to get network participants to play by the rules and agree on the truth. 

The Bitcoin and most other crypto  –  currencies using the proof work (PoW). In PoW, nodes use software and computing power to solve complex mathematical problems. The work they do allows them to validate transactions and add new blocks to the chain in exchange for fees. Some cryptocurrencies test alternative consensus algorithms, such as proof of stake and / or   decentralized voting mechanisms, to make sure the records are correct. Either way, the technology, together with predefined algorithms and social engineering, helps the network stay functional. 

Issuance of coins and tokens 

Depending on the case, the total number of pieces can be set by the creators from the start, or it can be unlimited. The total number of Bitcoin has been capped at 21 million coins, and the “new” coins are discovered during mining through Proof-of-Work. The total Ethereum supply has not been capped, so in theory the new coins could be minted indefinitely. In each situation, the rules and methods for introducing new coins into the system are defined by the technology and its governance. 

It is worth mentioning that the crypto-currencies or parts cryptocurrency are not the same as the crypto-chips. Tokens are  digital assets  that can be issued through smart contracts on blockchains suitable for issuing tokens, such as Ethereum and Neo. Tokens typically represent a value  such as a public service, private capital, a real world asset, a security token,  or a financial instrument. Successful tokens have large market caps and are traded on cryptocurrency exchanges alongside coins.

2017 has been a fantastic year for Bitcoin and cryptoassets. Markets rallied, Bitcoin prices skyrocketed to $ 20,000, and cryptocurrencies have become a mainstream media priority.

It was also in 2017 that Bitcoin split into two separate coins: Original Bitcoin (BTC) and Bitcoin Cash (BCH), which left the media and many new users in awe of the reality. 

Some BCH supporters even encouraged confusion and benefited from the original Bitcoin’s brand name and hype. Some websites and wallets have also referred to Bitcoin Cash as “Bitcoin” to express their opinion on BCH as the best version of Bitcoin. 

Since then, we have seen the rise of other coins breaking away from the Bitcoin blockchain and keeping “Bitcoin” in their name, for example, Bitcoin Gold (BTG), Bitcoin Diamond (BCD) or Bitcoin Uranium (BUM). In 2018, Bitcoin Cash further split into Bitcoin Cash and Bitcoin Satoshi Vision (BSV). 

This article will attempt to explain the difference between Bitcoin (BTC) and Bitcoin Cash (BCH) and a short history behind the hard fork that allowed BCH to exist today. 

The scalability dilemma

Bitcoin can be described as a peer-to-peer payment system. It allows direct transfers of value (in the form of digital currency) between peers without banks or other third parties. Transactions are verified by a distributed, global network of private computers, and the automated nature of the process makes Bitcoin faster, cheaper, and borderless. However, it is not yet scalable.

Due to technological constraints, namely the size of Bitcoin’s blocks (1 MB) and the time required to issue each block (10 min), the Bitcoin network can only process between 3 and 27 transactions per second (TPS). To put it in perspective, VISA can handle 56,000 TPS and typically operates at an average capacity of two to four thousand TPS. 

The growing popularity of crypto–currencies makes scalability Bitcoin increasingly urgent. Block size constraints mean that many financial documents simply do not fit into the block. As transactions compete to be processed faster, fees increase as well. 

Bitcoin Hard-fork

In 2017, there was a schism within the Bitcoin community of developers, miners, and node operators who run the global Bitcoin network. Part of the group believed that Bitcoin should stay as is, with a block size of 1MB. They proposed that future scaling be done through second-layer protocols, i.e. the  network. Lightning  , which allows off-chain transactions, with only certain data submitted to the blockchain itself. 

Others have argued that second layer protocols are not yet functional and that Bitcoin should adapt and evolve on its own. This group campaigned to increase block size by changing the code of the blockchain. 

One of the essential attributes of blockchain is that it is immutable, or rather, it is inherently difficult to change because any patch must be approved across the entire node network. This time, the community did not agree to change the original Bitcoin, and therefore the supporters of larger blocks decided to split up and create their own coin, Bitcoin Cash. It happened through a so-called hard-fork.  

“Fork” is a technical term for developers who take open-source code and create new and distinct software. A blockchain hard fork occurs when a large number of nodes disagree, and the blockchain splits into two different chains, each propagated through their network. 

On August 1, 2017, the Bitcoin hard fork took place which resulted in the creation of an entirely new currency, Bitcoin Cash, with a block size of 8MB, later increased to 32MB. Nodes that chose to Spreading Bitcoin Cash over the original Bitcoin have become part of the new BCH blockchain network.

Bitcoin versus Bitcoin Cash. Advantages and disadvantages

Bitcoin and Bitcoin Cash are two separate cryptocurrency coins, with different prices, market caps, and a different underlying blockchain. They come from the same blockchain, but once BCH broke up it took on slightly different attributes from BTC. 

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Blockchain scholars still disagree on BTC vs BCH scalability, as well as the future ramifications of the block size change. 

Bitcoin Cash appears to perform well in stress tests, where the network manages to process around 2 million transactions in a day without a significant increase in processing fees. The system seems ready for the influx of new users. However, BCH has not yet used the 8MB block sizes; the maximum it reached was about 4.5MB  . 

There is an ongoing discussion of further increases in block size going forward, which in turn could make blockchain quite ‘heavy’. The total size of the BCH blockchain is currently smaller than the BTC blockchain, at 171 GB and 287 GB, respectively. Full nodes are forced to store full copies of the blockchain as a source of truth. But as both chains grow, it will become more and more expensive to store them on the nodes. This can limit who can become a full node operator and introduce some type of oligarchy into the network. This is the case for BTC and BCH blockchains, but could affect BCH more, once it uses its increased trading capacity.   

The original Bitcoin continues to face the same scalability issues. Cryptocurrency is far from becoming the standard payment method, but the fees are already high and transactions can take a long time. You can pay the higher fees to be processed within 10 minutes, or pay less, but wait for hours or, in extreme cases, days. This puts a question mark on the future of Bitcoin in digital payments. At the same time, Bitcoin supporters are hoping that additional layers will address scalability issues, while Bitcoin remains a store of value and a long-term investment, like digital gold. 

No solution seems perfect yet, and only time will tell how the market develops. One thing seems clear; the crypto community could benefit from working together to increase the adoption and positive perception of cryptocurrencies as a whole.

Blockchain technology influences many layers of the economy. Cryptocurrencies enable instant and cross-border transactions, while blockchain databases are already helping businesses with supply chain logistics and identity management. But what does this mean for end users and how will blockchain shape the future of consumerism? 

The 2019 trends for retail markets suggest the growing impact of Millennials, aka Millennials, born between 1982 and 1996. They are the biggest adulthood group right now (and ever), and they’re shaping the unexpectedly walked. 

Millennials have been shaped by the 2008 financial crisis and the rise of social media. They don’t trust financial institutions or governments, but share intimate details with their peers and tech giants. Due to unfavorable labor markets and colossal student debt, they have experienced the lowest average income since the Great Depression, so they prefer experiences and a shared economy to just buying. 

The blockchain, which was created in the middle of the financial crisis (November 1, 2008), rather perfectly matches these alternative consumers. 

Here are some examples of how blockchain can shape the future of consumerism. 

1. Traceability (and fair trade)

With the growing demand for product sustainability and socially conscious brands, consumers like to be able to verify the provenance of their products. 

The blockchain allows us to track items from manufacturers to end users. It allows consumers, but also companies and actors in the supply chain:

• verify the origin or production of their products (Fairfood, Fairchain), 
• optimize the recycling of product components for a circular economy (Circularize), 
• limit counterfeit products in the chain, especially very sensitive items such as drugs or building materials. 

2. Transparency

Public open blockchains provide anyone in the world with access to blockchain data from their laptops or smartphones. In theory, we could track and verify our products and food anytime by simply scanning a QR code in a store or communicating with smart trackers, beacons, and other transportation management (IoT) gadgets. 

Many businesses and businesses use private blockchains to track their products and communicate with other businesses. But, in line with consumer trends, brands are stepping up their transparency to build trust, which includes letting customers see precisely where their smartphones, clothes, and lawyers are coming from. 

3. No banks = lower cost, faster transactions

Blockchain is a cross-border peer-to-peer system that allows you to buy products,  purchase token assets, earn free tokens,  and enter into trust contracts directly, without third parties, like banks, notaries, etc. lawyers and financial institutions.

For end users, that means lower fees, faster transfers when sending money overseas. For large consortia, the use of crypto–currencies could mean saving millions of dollars: 

• Avoid traditional exchange rates;
• Reduced transaction costs;
• Excluding lawyers’ and notary’s fees;
• Reduce opportunity costs by speeding up all settlements.

For now, companies are looking to cut costs and increase margins, but eventually the discounts will reach end consumers as companies compete for market share.

4. Faster e-commerce

As brick and mortar stores become less popular, many businesses are moving online. But with the 2-day shipping standards introduced by Amazon Prime, consumers become restless if their delivery takes longer than 4.5 days. 

Blockchain can dramatically improve the reconciliation process of businesses and, with it, the speed of their deliveries. 

Reconciliation is a process in which different companies agree on one version of the truth. Imagine that a package is sent from Company A to Company C through Delivery Company B. Each of the companies will have a different data management system, so how will they know when the package has arrived? 

Businesses will need to come to a consensus that the package has arrived or has not arrived. For example, Company A recorded that it sent a package. Company B has a record that the package has been delivered. But Company C may not have received anything. Reconciliation is the process of knowing where the package is right now. Using Blockchain technology (sometimes paired with smart devices), businesses can quickly check the delivery status on the blockchain’s open ledger without needing to trust each other or exchange information to find the package. lost. 

summary

The blockchain perfectly matches the current consumption profile. It offers a technological solution to build trust in consumer brands by increasing the transparency of their supply chain, tracing sustainable products directly from their source, reducing transaction costs and accelerating store deliveries. electronic.

There are over 1,600 active cryptocurrency exchanges that attempt to attract cryptocurrency traders and investors. In this article, we’ll discuss seven essential features to look for when choosing the best crypto exchange. 

1. Location

There is a sea of ​​crypto exchanges to choose from, but not all exchanges are available to all investors. Many cannot respond to citizens of the United States, China, or countries on the sanctions list like North Korea, Syria, and Iran. In the United States, local regulations may vary by state. When choosing an exchange, you first need to know if it works legally in your country or state. To be safe, you should also check the regulations and taxation of your local crypto assets. Bypassing the law by using a VPN is not recommended as you may lose access to your funds and have no legal background to sue or knowledge of the jurisdictions of other countries. 

2. Fees

Trading fees are standard operating fees that you pay in exchange for executing your trades. They are usually expressed as a percentage of your trading amount, or sometimes as a flat rate. A trading fee is deducted from your total transaction each time you sell or buy your cryptocurrencies. 

You should browse your chosen exchanges to check their fees. Below you can find a comparison of the fees of the largest global exchanges valid from May 2019. 

Other fees may include deposit and withdrawal fees when you put in or take out your currencies from exchanges, and margin trading fees. Margin trading includes leveraged trades (broker loans) and usually comes with additional fees. 

3. Liquidity and volume

Liquidity and volume are two of the most important statistics for trading. Liquidity expresses  the amount and size of buy and sell orders in the order book. Volume is the amount and size of transactions actually executed. Both of these statistics can inform traders if it is likely that the  exchange is popular  and has many sellers and buyers. If so, you are more likely to buy or sell your assets quickly at the right price, especially in the volatile crypto market. 

In practice, these two statistics are often falsely inflated. Malicious gamers can place big buy or sell walls (the big orders that can’t be filled) to inflate liquidity. Exchanges have also been shown to manipulate their volumes by trading with each other or between their own accounts. Recently, a CER organization has sprung up, offering volume checks. 

4. Exchange pairs

The term “pairs” in crypto refers to pairs of cryptocurrencies available for trading on the exchange, for example, Bitcoin-Ethereum or Ethereum-Dogecoin. This means that you can  trade Bitcoin to Ethereum and vice versa, or Ethereum to Dogecoin and vice versa, on the platform. Not all exchanges offer all pairs, so you should make sure that your preferred platform supports the coins you want to trade and offers the right exchange pairs.

5. Fiat deposits and withdrawals

Fiat is the standard currency like the dollar or the euro. Some platforms will allow you to use your credit card, wire transfer, PayPal, or debit card to purchase cryptocurrency with your local currency or to withdraw your assets in trust. This is not a necessary feature, but it makes it easier to invest if you are a beginner. Without a fiat function, you will need an exchange or a secondary platform to buy cryptocurrencies or withdraw your assets. 

The startup life is full of ups and downs. You are desperate for funding to develop and evolve your ideas while maintaining enough control to be able to implement your vision. Many believe that it is better to start and let your business grow organically than to sell to bad VCs and angel investors. According to Shikhar Ghosh, professor at Harvard Business School, at least 75% of companies supported by VC fail; And in another Tech Crunch VC analysis   , up to 95% of startups were either totally unprofitable or barely profitable.

This is why many advisers are now suggesting alternative forms of investing and financing like crowdfunding, ICOs and the latest startup trend, STOs or security token offerings.

ICOs (Initial Coin Offerings) grew in popularity in 2017, raising over $ 6 billion in 2017 and $ 7 billion in 2018. However, the bad reputation of potential exit scams and the general lack of regulation made them a big hit. bad alternative for tech startups who didn’t want to alienate serious investors and clients. This is where the STOs came in. They retain many of the benefits of crowdfunding ICOs and offer compliance with local safety regulations. Here are the five crucial benefits of STOs for young startups looking for funding.

1.  Lower cost

OCTs are sometimes described as a happy medium between ICOs (Initial Coin Offerings) and IPOs (Initial Public Offerings). IPO is a process of issuing and selling shares of the company to public investors in the stock exchange to raise equity. This is a long and expensive procedure that requires a thorough audit and significant preparation intended to protect public investors against potential fraud and financial loss. Not all companies are ready for an IPO, as we recently experienced with the WeWork scandal. The STO offers some advantages of an IPO, such as the ability to sell your company’s shares to the public at a lower cost. You also avoid much of the tedious paperwork with the largely automated process of tokenization of stocks. Digital stocks can be issued quickly and legally on the blockchain using pre-checked and pre-programmed smart contracts.

2.  More control

STO offers you a wider range of options than an IPO. Instead of issuing shares of your company on the stock exchange and dealing with a board of directors and investor votes, you can get creative and secure only part of your business or the assets and other shares of the company. company using the SPV (Special Purpose Vehicle). You then effectively borrow from your investors to pay them back in dividends rather than sharing ownership directly with the parent company. It all depends on your agreement with the investors. If you choose to securitize the whole company itself, you can specify the type of investor voting rights and shared ownership laws. Either way, you are less likely to face large and influential shareholders like VCs and angel investors who might put unnecessary pressure on vital development and implementation decisions.

3.  Coded rules and regulations

The STO or security token offering is the issuance of digital security tokens that represent the company’s equity or other equity in the project, with rules and benefits encoded in the token structure. These digital assets are issued on the blockchain and pre-programmable through smart contracts. Indeed, they represent a contract between managers of startups and investors of startups, with rules agreed upon during the purchase and programmed in the token code. These can include details of dividends payable, voting rights, and local regulations on who can buy and sell assets.

4.  Compliance and transparency

Unlike ICOs and IPOs, security tokens give you an inherent compliance option, with enforceable rules on who can buy and sell the assets encoded in the tokens. The code may also specify investor voting rights and other agreed conditions.

Issuing tokens on the open public blockchain provides additional transparency that aids in compliance and auditing. You can monitor and track attendance in real time. This does not mean that sensitive financial data will be exposed to the public per se. Cryptocurrency owners are not directly identifiable through their wallet addresses, and transactional data is typically encrypted. However, you can easily give auditors direct access to your investor list and their transactions, with tokens that are easily tracked and verified online for internal and external audits.

5.  Accessibility and liquidity

While the stock market offers shares of companies to specific broker accounts and accredited investors at a significant price plus brokerage and transaction fees, STO offers smaller, fractional shares and lower prices available to investors. global retail investors. Asset splitting, coupled with 24/7 online access to crypto asset markets and exchanges, dramatically increases asset liquidity. This means that you can more easily sell your stocks and raise the necessary funds for the next stages of your development, as you access the global network of retail investors rather than looking for rare local VCs.

summary

The security token offering is growing in popularity among young startups and becoming an attractive alternative to traditional IPOs and crowdfunding. STO offers a faster, cheaper and more flexible way to raise the funds needed for project development while keeping more control over vital business decisions. At the same time, STOs are more secure, inherently compliant, and more accessible to the general public and retail investors. The digitization of corporate equity on the blockchain provides startups and early stage investors with continuous liquidity and access to global markets through 24/7 crypto-asset platforms and crypto exchanges.

Bitcoin, a digital currency issued on the Bitcoin blockchain, is the first and most famous cryptocurrency. It is so widely known that many people use the term Bitcoin and cryptocurrency interchangeably. However, there are other cryptocurrencies (aka altcoins) that work on different blockchains and offer a range of applications and technological benefits or tradeoffs. 

Markets remain diverse, with many coins coexisting offering a variety of features. Long-term investors are hedging their bets, investing in a portfolio of the major cryptocurrencies, trying to catch the one that could become the future Microsoft or Apple. Short-term traders benefit from the volatility of the forex-type market, taking advantage of fluctuating prices and the uncertain regulatory environment. Whether you are a budding investor or a trader, it is good to know about alternative cryptocurrencies so that you can make better investment decisions. Here are the 5 best crypto-coins that are worth studying. 

Ethereum (ETH)

Ethereum (ETH) is the second largest cryptocurrency in the world, according to Coinmarketcap. The majority of websites and wallets use the term Ethereum for the platform, blockchain, and cryptocurrency, even though the coin itself is referred to as Ether, a term that is rarely used.

The concept of Ethereum was first proposed by a young Russian researcher and programmer,  Vitalik Buterin. Ethereum’s biggest benefit is the introduction of self-executing smart contracts, often referred to as decentralized applications (DApps). Smart contracts are mini-programs that can perform any function or condition, often issuing new crypto tokens. Anyone can use the Ethereum programming language, Solidity, to create tokens, build decentralized applications, and run them on the Ethereum virtual machine. The majority of current crypto tokens are made using Ethereum’s ERC20 standard. Ethereum’s competitors in the tokenization niche include NEO, EOS, Stellar, and Cardano. 

Ethereum is often part of a diverse crypto investment portfolio. The benefits of ETH include the intrinsic value of the platform other than monetary transactions and the wide adoption by blockchain projects, tech startups, and companies interested in token issuance and asset tokenization.

Ripple (XRP)

The name Ripple can refer to the company (Ripple Labs), the Ripple network (RippleNet) that executes the transactions, the Ripple blockchain, or the  XRP coins  used in the transactions. 

The Ripple blockchain offers an alternative to slow, expensive, and outdated financial transfer systems such as SWIFT. Thanks to Ripple, large businesses can quickly transfer money overseas, while bypassing traditional exchange rates and additional bank fees. 

Unlike decentralized and open source blockchains, Ripple is a centralized, for-profit company that hopes to monetize its cross-border transfer solution. The managers used traditional funding channels to raise significant seed capital from global banks and public investors. This makes Ripple more trustworthy in the upper echelons of the business and almost uniformly despised by crypto enthusiasts who believe in decentralized finance. 

The advantages of Ripple include transaction speed and scalability. XRP settlements take around 5 seconds, while BTC settlement speed is around 10 minutes (the average time it takes to create a new block on the Bitcoin blockchain). Ripple is also more scalable at the moment; it can support over 1,500 transactions per second (TPS), as opposed to Bitcoin’s 7 TPS. 

Litecoin (LTC)

Litecoin is considered to be one of the largest cryptocurrencies in the world. It was developed in 2011 as a solution to Bitcoin’s low transaction speed and scalability issues. It was intended to complement Bitcoin’s value storage status with faster and cheaper transactions. 

Based on the same source code as Bitcoin, Litecoin retains many Bitcoin features. It uses a consensus based on proof of work. New coins are mined, giving a sense of scarcity meant to increase the coin’s intrinsic value. LTC and BTC numbers   are capped at a certain number; There are 84 million Litecoins for 21 million Bitcoins, and both coins can use similar technologies such as the Lightning Network to speed up transactions in the future. 

Differences from SLD include:

– Shorter block time (2.5 min instead of 10 min per block)

– Different hashing algorithm (Scrypt, instead of SHA-256)

– More expensive mining configuration (heavy memory vs heavy processing).

Many crypto enthusiasts point to the redundancy of Litecoin in the sea of ​​newer and faster coins focused on the payments niche. However, Litecoin remains one of the oldest and best-known coins with a large market capitalization and an active community of investors, which makes it an attractive currency for speculators. 

EOS

The EOS blockchain and  cryptocurrency  native (EOS) are in direct competition with Ethereum. The open-source project offers a smart contract platform with minimal fees and millions of transactions per second. 

The EOS white paper was only published in 2017, claiming a solution to the scalability issues of previous blockchains by introducing delegated proof of consensus on issues. Since then, the cryptocurrency quickly reached the 7th high position in the Coinmarketcap (as of December 2019). 

Critics of the DPoS solution point out that EOS achieves higher network throughput and potential scalability at the expense of decentralization and security. The EOS network has only 21 block producers. The advantages of the EOS platform include: 

– Simple environment and tools for DApps developers

– Ultra-low fees (aiming for zero fees in the future) 

Despite harsh criticism from advocates for decentralization, the EOS coin is in high demand and the concept of DPoS consensus drives research and development in crypto communities. The platform is still relatively new, and it will have to work harder to get developers and startups to tokenize on EOS rather than Ethereum.

BCH

Bitcoin Cash is a hard fork of Bitcoin that broke up in 2017 and is currently the fifth largest cryptocurrency, according to Coinmarketcap. 

The benefits of BCH, as opposed to BTC, may include future scalability through larger block sizes that allow more block trades and faster settlements. BCH supporters point to the excellent results of the network stress test in 2018 which saw more than 700,000 successful trades in one day. BCH can currently process approximately 116 transactions per second. The coin also has many compatible wallets and a vibrant community that has broken away from the classic Bitcoin and continues to develop BCH and promote its global adoption. 

Critics point to recent BTC, BCH, and BSV block-size feuds that range from philosophical debates to Twitter wars, and may have confused and alienated some of the mainstream media and investors. 

summary

There is an ongoing discussion about which coin is most likely to succeed in financial markets due to its technological and socio-economic advantages. The potential winner of this race, if there is one, could lead the market in terms of adoption and application across industries. Many are hoping that buying the right cryptocurrency for the long term could be similar to investing in early Microsoft or Apple. 

Bitcoin maximalists believe that Bitcoin will be the only functional coin of the future, while proponents of Ethereum, Bitcoin Cash or Bitcoin SV believe that the coins chosen are optimal for long-term growth and adoption. . As with the dotcom bubble, only time will tell what crypto-currencies, if any, remain effective over time and how the technology the blockchain continues to disrupt various industries. 

In the meantime, as an aspiring crypto investor, you should always do your own research, follow market movements, and keep up with recent developments in the blockchain and cryptocurrency niches. 

Warning

This article is an expression of the authors’ opinions and publicly available information on cryptocurrencies. This article does not constitute financial or investment advice. Blockchain

Imagine owning a piece from “Buckingham Palace” or “Mona Lisa Painting”. Obviously, you can’t really buy a piece of one of these precious pieces, but modern concepts have now made it possible to literally “own a piece” of an asset, and why not one of those prestigious assets?

Tokenization of assets

In today’s modern world, almost every asset has a singularly defined property. In other words, every asset, like real estate, works of art or even your favorite sports team, has a singularly defined property.

However, blockchain technology has the potential to completely change the landscape of this ‘defined asset’. The blockchain allows an asset to be tokenized so that each asset can be divided into several fractions. Each fraction can belong to different entities. In other words, asset tokenization  allows any asset to have clearly defined multiple ownership.

The asset, held in fraction by several parties, can be symbolized using security tokens. These tokens are raised on a blockchain platform and they are backed by a real underlying asset. The importance of a security token is that it facilitates defined actions, pays dividends, and collects profits. Each security token represents equivalent shares of the underlying asset. For example, real estate land worth $ 100,000 can be divided into 1,000 security tokens, each token worth $ 100.

Exciting, isn’t it?

What can we tokenize?

Tokenization has potentially opened up new areas that have further expanded the possibilities. This includes the symbolization of intangible assets such as copyrights, patents, stocks and bonds as well as tangled assets such as land, precious metals or even exclusive works of art.

Security tokens further allow the exchange, purchase or sale of these tokens. Utilities tokens or crypto  –  currencies tend to lose value as they have no real support. But because security tokens represent an underlying tangible or intangible asset, their behavioral characteristics are different from utility tokens.

Company shares

Let’s say you want to invest $ 1,000 to buy public shares of a few companies. However, the amount of investment eliminates large organizations like Google because their share price is over $ 1,000. Plus, if you even invest a stock with Google, it automatically eliminates the possibility of diversifying your portfolio by investing in multiple stocks.

Tokenization allows you to buy shares of these large companies by allowing you to buy fractions of a share. Therefore, instead of buying a stock, you can choose to buy 1 / 4th of the stock and receive subsequent returns or profits. In addition, it would also allow you to diversify your portfolio from the same amount of investment.

Tokenizing financial instruments such as company shares would also increase market liquidity. It also promotes inclusiveness by reaching out to a wider audience regardless of value or price.

Immovable

One of the areas where tokenization can deliver maximum value is the real estate industry. This is due to several reasons. Our conventional real estate sector has multiple shortcomings. This includes exclusive with high barriers to entry, various bottlenecks, reduced liquidity and largely opaque.

Tokenized real estate allows real estate or land to be divided into several fractions on the blockchain. Each fraction represents a share of the property. Essentially, tokenization facilitates fractional ownership of a real estate asset. It can also offer a number of advantages.

First of all, it removes real estate barriers in terms of the amount of investment required. Anyone can buy shares in real estate and additionally receive rental benefits or the return on a real estate investment. Then, it increases the liquidity flowing in the market by allowing inclusiveness in the market. Third, it also makes it possible to invest in spaces offering a higher return but difficult to access. Concrete example: token parking spaces. Apart from that, it also promotes transparency with blockchain in any real estate process.

Stablecoins

Stablecoins are probably the most simplified tokenization application. Stablecoins are cryptocurrencies linked to a fiat currency like the US dollar or the euro.

The blockchain has multiple advantages due to its main protocol. For financial transactions, it can offer various advantages including instant transfers, cross-border transactions, negligible fees, and much higher security than our traditional instruments. In addition, a practical application with all the advantages mentioned above already exists, namely bitcoin.

Stable coins that are backed by the underlying fiat currencies can be used for industries like cross-border remittances. It would involve a financial process which is an easy, instant and inexpensive approach.

Funding

The blockchain offers fundamental advantages when it comes to financing. The first, but not in retrospect to tokenization, is that blockchain has provided a platform for raising funds. A variety of ICOs and blockchain startups have raised funds for their projects via tokens. Startups can reach a larger number of investors even without a platform and subsequently investors can find a number of projects to pool with their money.

Through tokenization, fund shares can be distributed on a blockchain ledger. This further ensures an efficient exchange of shares on the blockchain itself. Therefore, the ownership of shares in the fund is clearly defined. Similar to company stock, tokenization provides fractional ownership of funding and therefore allows for higher liquidity.

In addition, different legal obligations depending on the parameters can also be programmed into the blockchain. This only allows eligible parties to participate in the funding process. Blockchain tokenization also removes the need for intermediaries to monitor the process. Most tasks can be automated using smart contracts and thus reduce additional costs.

Raw materials

From sugar to coffee, various factors affect the market including location, supply and demand, currency exchange rates, etc. With a number of factors setting the real-time price of individual products, it has given rise to frauds.

The buying and trading of commodities has always been in the hands of large institutional investors. While millions of commodities are traded every day, much of it is carried out by big players. Tokenization would allow retail investors to be part of this market by allowing investments worth only a few tens of dollars. 

Real-time pricing is now widely manipulated by fraud and corruption in the commodities market. Blockchain facilitates a distributed ledger that is transparent and accessible to every member with equal abilities. With greater transparency and verifiable actions, it would become easy to monitor the real-time price of products.

In addition, tokenization can also contribute to the operational activities of the billion dollar commodity market. This can help reduce administrative costs and additional costs. Tokenization can help generate higher liquidity and efficiency in the market.

Asset management has traditionally been reserved for institutional or high net worth investors (HNWI) due to complex regulatory frameworks and the overall cost of investments. The high demands placed on asset managers, family offices and private banks significantly increase the price of financial advice and asset management services. Professional traders and asset managers must have a brokerage account, while wealth managers have additional fiduciary duties. Most financial service providers must also adhere to Know Your Customer (KYC) and Anti-Money Laundering (AML) rules while navigating the maze of privacy guidelines (GDPR),

It’s no wonder then that fintech startups using sophisticated machine learning, CRMs, and widespread automation are quickly disrupting financial niches and bankrupting operators. From neobanks surpassing traditional financial institutions, to robotic advisory machine algorithms teaching clients how to invest instead of human advisers, to the new tokenization platform offering the whole new world of assets; financial markets appear to be on the verge of a paradigm shift with the emergence of a new asset management environment.

What is tokenization?

Tokenization understood as the use of tokens to represent an asset has been around for centuries, says Shermin Voshmgir, a PhD. of Economics and director of the Cryptoeconomics Research Lab at the University of Vienna. However, with the recent invention of blockchain technology, explained in the Pinnacle 2009 white paper, asset tokenization is now set to completely disrupt the asset management industry.

Tokenization on the blockchain means that ownership of the asset can be expressed in the form of a digital token. The token is a piece of code that contains proof of purchase and contract details. Transactions between buyers and sellers of tokens are done on the blockchain so that ownership of the token can be time stamped and tracked on the digital ledger record. So what’s so disturbing about this? The answer lies in the characteristics of what we call distributed blockchains and the emerging field of DeFi or decentralized finance.

The importance of blockchain in the tokenization of assets

Blockchains could be described as another type of database or digital ledger with a specific set of characteristics that makes it particularly useful for the tokenization of financial assets.

The blockchain is distributed and decentralized, which means that a copy of the blockchain is stored on private computers all over the world, and it is difficult for hackers, governments or other entities to track and influence all of them. the copies. The blockchain does not have a single point of failure like data centers which could be subject to attacks and data tampering.

The blockchain is also time-stamped and immutable, which makes records secure as well. For example, data is submitted to blocks, where each block in the chain contains a hashed number of previous blocks. The smallest change in data will change the hash, making the fault instantly visible throughout the chain and easy to dismiss by the network.

Most common blockchains have their own distributed governance or a network of computers encouraged by the system to validate correct transactions by reaching majority consensus. The system is inherently designed to operate without the need for trusted third parties like governments or lawyers to oversee the process. Indeed, transactions made on the blockchain are both more secure and much cheaper than those in the traditional financial sector, which opens the possibility for new companies and investors to join the market.

New world – new assets

The management and investment of assets are currently facing multiple challenges. Traditional investment vehicles are often too expensive for retail investors; these are the common people willing to invest small amounts. The system often inflates brokerage fees with minimum investment amounts exceeding $ 5,000. Ownership is both expensive and time consuming and requires many third parties such as notaries, banks and lawyers.

New robotic investment and advisory applications like Robin Hood and Acorns are gaining ground and opening up markets to a wider audience. However, they are still not available globally, and traditional regulatory frameworks hamper the wider disruption.

These are assets symbolized on the blockchain that could push the momentum forward. Tokenization offers a new world of potentially borderless assets, accessible from anywhere at any time and instantly transferable at minimal cost.

Researchers, businesses and exchanges are currently working with regulators to build new legal frameworks. In the meantime, tokenization already offers a fast and automated way to secure assets while complying with local ordinances. Once smart contracts are legally validated, they can be used across the board to symbolize any kind of real world asset, from real estate to art and collectibles.

Why real-world asset tokenization will change asset management

There are many incredible benefits to using asset tokenization and blockchain to disrupt the asset management scene. Blockchain offers low transaction fees, instant transfer of ownership, and most importantly, seamless access from anywhere in the world via the internet or even completely offline.

With open public blockchains, it is easier for everyone to participate in the exchange of assets regardless of their financial situation. It’s also easier to monitor and audit your assets, although owner privacy is still protected and actual blockchain data encrypted with hash algorithms.

Assets that were previously expensive, illiquid, and difficult to buy and sell can now be instantly digitized and sold as tokens to one or more different buyers. This type of shared ownership and asset management may soon become a new trend in real estate investing , similar to real estate crowdfunding.

Various technical and legal issues still need to be addressed before tokenization of assets on the blockchain becomes mainstream. Yet the exchange of crypto-currencies and traditional exchanges are fighting already for the share of this emerging market and build new asset management frameworks. Many are already working with their local regulators to develop alternative regulatory environments for what they hope will become a new asset class, crypto assets.