Blockchain technology brought a new concept of tokenization into the world of physical assets. This approach has led to the emergence of security tokens which are used to represent real-world property/assets on blockchain platforms. The digital tokens have a couple of features that resemble stocks exchanged in different financial markets although a consensus on regulation is yet to be decided. Just like securities, investors can hold a portion of the tokenized assets by purchasing their preferred number of tokens.
However, this is does not mean that security tokens shares all features found in stocks. Blockchain is the main distinguishing factor between the two assets, the platform incorporates immutability of records and cuts transaction related costs significantly. This is why prominent organizations are slowly acknowledging blockchain’s ability to seal the loopholes in existing systems.
Milestones in Blockchain Integration to Physical assets
A couple of projects have already jumped in the bandwagon of using blockchain for verification of physical assets given its immutable nature. A good example in the industry is Verisart which is using blockchain tech for keeping records of highly valuable art and gallery around the world. It is joined by the likes of Codex Protocol, an upcoming business that has begun storing art records on blockchain too. This idea comes at a time when the market is ready to eliminate fakes in the physical assets arena while blockchain adoption is on the rise hence a prospectus future.
An interesting position by car manufacturers has started to emerge in light of the blockchain technology. Household names in both Europe and the USA are considering the integration of blockchain’s functionalities into their existing systems. Ford, BMW, GM and Renault are just but a few of the automakers that have shown interest so far. An initiative ‘Mobility Open Blockchain’ by players within this industry aims at accelerating blockchain adoption with users being able to make payments autonomously as well as share rides.
In addition to the above, Blockchain has found a new niche within the car industry. Classic and exotic automobiles record keeping is an area whose authenticity is highly questionable.
Documents for these types of cars could have been easily altered in the past making standardization a difficult procedure in case of valuation or verification. This brings us to the new ‘Proxeus Blockchain’ project whose launch is on the way!
Tokenization, luxury cars, & Proxeus technology… A good read from @mikebutcher about the Mercuria Helvetica partnership & car certification (a functionality available on the #beta) via @TechCrunch. #blockchain #xes https://t.co/NnL9EvVrC8
— PROXEUS (@proxeusapp) July 21, 2018
The Proxeus Blockchain
The new startup has ventured into the blockchain supply market for automobiles.
Proxeus targets classic car owners and dealers as their main clients. The idea is to provide a platform where records for the car collections can be kept for verification in future. So far, the team has managed to obtain its pioneer customer ‘Mercuria Helvetica’ whose location is Switzerland.
The blockchain process within Proxeus is designed to verify the authenticity of an automobile’s certifications. This procedure may include checking whether the conditions specified for a car concur with the records on the blockchain. Additionally, a vehicle can be tokenized on the platform whereby its history and ownership records are linked to a certification library.
Proxeus project is currently launching a beta version that comes with an improved interface that can be easily dragged or dropped. The team pointed out that their aim within the blockchain arena and automobile industry is to link the two as opposed to unnecessary tokenization that may extend to luxury cars. Both the co-founder and CTO are quite impressed with Proxeus developments do far,
Antoine Verdon, co-founder, says:
“For the first time we are able to show that our technology is real.” Artan Veliju, CTO, says the platform has the “ability to easily build the workflows needed to use blockchain productively without needing to launch a software development project.”
Basically, the motive is to enable people all over the world to be able to interact with their blockchain. As it stands, Proxeus prospects include supporting the record keeping of legal documents like property certificates or business entries for future verification and safeguarding data. The University of Basel is among the organizations using blockchain successfully, they use the technology for course certifications in Innovative Finance. Proxeus is set to release its tokens ‘XES’ for market sensitization on how its ecosystem will function.
The project has now moved to working on the pending bit of its projected structure and protocol after it raised $25 million in its Initial Coin Offering process. It seems tokenizing of physical assets has gained momentum since 2018 begun and we are yet to see its full potential.
Tokenization Viability with Real-World Markets
Valuation of assets in the current financial markets is mostly pegged on different statements. However, an emerging trend within the blockchain and financial threaten to alter asset pricing soon. Recording physical property on-chain could change the value of assets like land which will have more exposure and distinguished categories. This is not to mean that prices will immediately reflect the true value of an asset but rather a gradual process that will depend on market forces within crypto tokens.
The capital generation expected to arise from the globalization of tokenized assets might be a major drive for change. This is mainly because assets saved on the blockchain might attract suitable investors depending on their ranking. In addition, they will gain advanced features to enable a security like pay-out stream hence dividends in future.
Shortcomings of the process
An issue that has made most of the world skeptical about crypto coins is their regulation. A good example for this case is a scenario where property is sold while another party had purchased its tokens on a platform. This leaves the token owner stranded since the laws on ownership of the physical property do not protect the token buyers. It is therefore important for comprehensive legal guidelines to be set for this industry to thrive.
Tokenization also beats the logic of decentralization. Once the physical assets are tokenized it creates an impression of a centralized market which deviates from the smart contract and blockchain application in general.