The Money Paradigm

Creating digital assets is a recent development adding to the viability and security of real assets. I’ve explained different types of assets – physical, intellectual and project – elsewhere but any asset can be ‘tokenised’, even if at present it has very little real value, especially in the case of project assets.

The principle is this. You create a fixed number of tokens to represent the asset; let’s say you own a work of art, an original Van Gogh perhaps, or something less tangible like the rights to Paul McCartney’s music catalogue. Let’s say you create a million tokens for this asset and offer them for sale. People will buy the tokens to ‘own’ a ‘piece’ of your asset and then perhaps sell them on at a profit depending on the forces of supply and demand.

Here’s the thing: you get the initial sale money which may be in the form of other crypto coins or in ‘cash’, it depends on what you need, and the people who bought the tokens have a saleable representation of the value of your asset.

They don’t own the asset, they don’t own a share of the asset, they own the tokens. Depending on demand the values of the tokens you issued may reach a higher ‘value’ than that of the asset itself, which of course you may be able to realise if you decide to sell the actual asset.

It’s a way of monetising your asset while retaining possession of it, it’s a way of funding your project without giving away control of its development and eventual use to a bank or private or corporate ‘investor’. In a way this is similar to the principle of ‘crowdfunding’ but doing it with decentralised funds instead of government money.

There are regulatory aspects to be worked out to protect people from being defrauded – the asset being tokenised must actually exist – and to find a way of ‘taxing’ the operation but these are not our concern. Tokenisation of assets is becoming a major factor in building wealth and personal freedom.