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Asset Tokenization: Essential to Powering the Next-Generation Digital “Instance” Economy

Published and Written by Nitin Gaur -Director, IBM WW Digital Asset Labs at IBM

09.07.2018 NewsPublications
Digital security concept
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This is a long-overdue post. After expending time and energy on a recently published book, I figured I should get back to sharing my learning and soliciting your feedback on that learning. While the book title suggests hyperledgers, my co-authors and I have attempted to keep the content agnostic and relevant to all blockchain projects.

It has been an interesting journey in the blockchain world, and in my very first post in 2018, I discussed several focus areas. One of them was asset tokenization. In this post, I intend to expend some time on discussing this topic, as I believe it is essential to not only powering the next-generation digital economy, but also to paving the way for new business models built upon the “instance economy.” Let’s begin with some back ground.

In the past, I have also discussed the divide between the permissionless world, which refuses to adhere to any conventions and forges ahead with many innovations that are bound to disrupt many industries, either with new business design (e.g., initial coin offerings (ICOs)) or conventional industries attempting to adopt the technology to either transform the industry or beat or simply keep up with disruption. This spectrum of technology-driven platform and the use cases that exploit them rely on some of the manifestation of value. This digitization, be it systemically generated in the form of a transaction utility coin or a layer-two token that relies on the underlying coin for its valuation, is nothing but a digitized notation of an instrument that has a real or perceived value.

While the genesis of blockchain, which was largely permissionless (e.g., crypto-asset-based networks such as Bitcoin, Litecoin, etc.), relied upon technology-based systemic governance comprising incentives and mechanisms of coordination. This systemic governance has its own set of challenges in the enterprise business networks attempting to exploit the tenets of blockchain technology. In the enterprise world that is largely regulated and relies upon (mostly) permissioned blockchain models, the checks-and-balances system is complicated by transactions between competing entities, often with regulated data and a fiduciary responsibility, which can neither account for the tangible or systemically generated incentives (crypto-assets) nor have network-wide mechanisms of coordination due to privacy and confidentiality issues.


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