![]() If the blockchain in which bikecoin resides offers no on-chain service, then bikecoins are no more than a tokenised gentlemen’s promise. Without this legal framework, bikecoins would actually be soft tokens, meaning that the bearer may be refused access to the underlying service at any time and without prejudice. Either the company issuing the coin, or the company owning the bikes, has to have a contractual obligation with the token bearer to transfer the bike riding right to them. For “bikecoin” to be a hard token, there needs to be a legal framework behind it that gives real world rights to the bearer to ride a bike. smart contracts), create legally binding obligations between two or more parties. Contracts, a word often misused in the blockchain world (i.e. When we talk about rights in the real world, we are effectively talking about laws. The token has claims outside of its chain and therefore it’s not confined by it. Yet this “bikecoin” gives rights to the bearer to access a bike riding service for certain time. Riding a bike is a service, not a physical thing. You could have a hard token that gives you rights to rent a bike. The concept of hard tokens doesn’t just apply to physical things. The understanding is that as long as that chain exists the token can be redeemed for the service it provides. Soft tokens could be seen as “prepaid API keys” which create a tacit on-chain service agreement between the service provider and the token holder. The more users Bitcoin has, the greater its value is. The market cap of Bitcoin, in a way, represents the value of P2P electronic money represents to its users. The Bitcoin blockchain allows people to transfer money electronically without intermediaries. When you own a soft token, in a way, you own a fraction of the value of the blockchain in which the token exists. These tokens derive their value from the features that their chain itself offers. Storj, Golem, Sia, and many others are also examples of soft tokens. Ether has no rights outside of the Ethereum blockchain. But you can’t use Ether to claim some of the equipment used in the computation, or to demand to visit the facilities used by the miners to run your code. If you own Ether you can use it to pay miners to execute your smart contract code. Bitcoin, therefore, is a soft token as it’s confined to its own chain and has no rights outside the blockchain.Įthereum, another prime example, is a soft token. ![]() Yes, you can use Bitcoin to purchase a cup of coffee, but the merchant accepts your Bitcoins at their own discretion since they have no legal obligation to take your Bitcoin and give you coffee. ![]() There is no collateral behind each Bitcoin, you can’t really redeem them for an underlying asset, and it doesn’t give you any rights to claim anything against it. When you own Bitcoin, you don’t own any claims on anything that belongs in the non-digital world. Tokens that are digitally native and have no representation of an asset, either physical or intangible, are by definition confined to the chain in which they exist. TL DR Tokens representing fractions of assets are worthless without a legal contract that gives those tokens bearer rights over the underlying assets. What is asset tokenisation really, and what do companies mean when they claim that they’re tokenising assets?īefore going further into this topic I wanted to make the distinction between two types of tokens that exists, and that it may not be entirely obvious to everyone. When I go to events and people see me presenting Maecenas, one of the questions that I’m frequently asked in the Q&A is: “How do you link the tokens to the actual artworks?”Īnd this is the key question that everyone running a blockchain start-up claiming to tokenise any asset should be able to answer. ![]() Owning a piece of a Picasso will now be so much more affordable.īut there clearly has to be a process to achieve all this. It basically means that fine art will no longer be the privilege of the super-rich. “…divide up masterpieces into many fractions, creating financial units that can then be traded efficiently and transparently on our Blockchain-powered platform.” We are building a decentralised gallery, democratising access to fine art investment. I wanted to share my thoughts about it because, at Maecenas, we’ve been working on fine art tokenisation for a few years now, way before the word “tokenisation” was coined (no pun intended). Asset Tokenisation: Soft Tokens vs Hard TokensĬ ryptocurrencies and blockchain technology seem to go through hype cycles, and I’ve noticed that asset tokenisation is the latest hype. ![]()
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