There is no doubt about it: blockchain technology and cryptocurrencies are going mainstream and quickly getting traction despite some bumps in the road. This technology opens doors to people and changes the landscape the way e-commerce once transformed our everyday lives.
Jeff Bezos, whofounded Amazon in 1994, is now the world’s richest person. He introduced a conceptthat changed the way we see things. Similarly, tokenization has the ability tocompletely reinvent traditional markets, making them more accessible andsecure.
First things first: what is tokenization?
Tokenization is,simply put, the process of taking any sort of sensitive information such ascredit card information, bank account numbers and other data and jumbling thenumbers randomly to get a unique sequence (an indecipherable token), for safe and securestorage. Now, I realize I said simplythere, so let’s break it down.
I have a key to myhouse, and every month I lose my key and have to go to the one person left inthe world who can make a copy. Rather than leave my loved ones at risk for abreak-in, I invest in an electronic code for my door.
If you’re stillwith me, essentially, tokenization is taking traditional “keys” for personalinformation, and putting them into a code lock.
Where can tokenization benefit investment?
Tokenized securityinvestments are a great way to provide liquidity and create assets open to anew class of investors. It includes those who have the nose for the latestinvestment trends but have limited financial means to tap into that opportunity.
There are manydifferent use cases for this new type of investment, including art, real estateand even a whole new asset class – tokenized VC portfolios.
Before tokenizationof assets came along, investing in both art and real estate was a surefire wayfor investors to profit. With art, the price almost always rises and in realestate it could fluctuate dramatically to eventually rise again. Both art andreal estate investment have traditionally been open exclusively to affluentindividuals. This has perpetuated their wealth and left the rest on thesidelines of investing.
Tokenization hasthe potential to open these assets and welcome a new type of investor to thisupper echelon: from individuals traders to amateur blockchain investors, fromtechnology aficionados to your grandmother. Its potential has gone way beyondart or real estate. You can now tokenize your future.
Art
In the art worldprices are constantly climbing and masterpieces are auctioned off at sky-highprices. In 2010 a Picasso was sold for more than $100 million.Its value will likely continue to increase as time goes by. But few can profitfrom it. Art collectors are among the select few who can do that and becomingone of them has not been simple. Most people could not even dream of owning amajor piece of art.
Tokenizing art hasthe ability to change this though. In 2018 the famed auction house Christie’s in New York sold its first piece ofart paid for entirely via blockchain. The piece was sold through Artory, ablockchain-secured registry using decentralized ledgers to allow investors toanonymously buy art while still tracking histories, provenance and more.
Tokenizing artallows people to own a part of a masterpiece using security tokens. Imaginetaking a $10 million Monet painting, and splitting it into an infinite amountof virtual pieces without actually tearing it apart. Buyers can purchase manypieces of the painting, similarly to how they would purchase company shares ona traditional stock exchange. This allows virtually anybody to invest smallamounts of money into something traditionally out of reach for most and to getsubstantial returns. This opens up a previously inaccessible asset class.
While art and realestate are the more obvious examples of asset tokenization, there are other,more innovative and secure ways to tokenize.
Startups
Tokenization can bea gateway to both being a part of something bigger and to making financialgains. What better way to do it than to invest into promising startups that areon their way to become the new Ubers and Reddits of the world?
But just like art,startups are also hard to invest in unless you have hundreds of thousands ormany millions of dollars at your fingertips. Traditionally venture capitalfunds do this type of investing. They, too, face a challenge by having to waitfive to 10 or often more years to see a company go public or get acquired by alarger company. A VC fund profits after a successful exit but the capital getslocked in for years.
There is a way tosolve both problems through tokenization. When a venture capital fund’s startupportfolio gets tokenized, potential buyers receive a piece of what could be thenext Airbnb. This list of new buyers doesn’t have to be limited to professionalinvestors and wealthy individuals, it can and should include virtually anybody.
If you have aplatform which creates a secondary market for these tokens, you can democratizeinvesting into startups. A platform like that will enable everybody to getaccess to future technologies, from self-driving cars and space exploration toartificial intelligence and blockchain.
We have beenworking on creating a platform exactly like this. At VNX, we want to not onlyhelp people get access to tangible, reliable and transparent assets but also tounlock liquidity for VCs who wait years to see their efforts come to fruition.
We really believein creating a community, a trusted ecosystem for technology lovers of allcalibers, where everybody wins.
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