Web3, Looking at the bright side — the tokenized world.

Innovation is a by-product of chaos. Don’t just believe what I say but history speaks for itself.

Dating back centuries, every time the world is hit by a storm, a new era starts with a new concept.

How many times have you heard that Bitcoin came to the world in the midst of the 2008 economic crisis? I have mentioned this in a lot of blogs myself and so have countless other people.

While the statement is true, it carries a much deeper meaning.

2008 was just a starting point that introduced us to Blockchain. The recent pandemic, economic slowdown, geo-political factors, and the recession knocking on our doors presents a unique opportunity that forces us to question the capabilities of the current system.

In a sense, a seed had been sown back then which has grown over the years, and now it’s time for it to bear fruits. Sure there has been autumn in between, like the 2017 ICO fiasco and the current situation with countless scams and frauds.

However, Autumn is also proof that change is the only constant. Which we are witnessing at the moment.

The negativity in the industry eradicates the need for me to address the elephant in the room for the purpose of making a point. Let’s agree to accept the fact that the Blockchain and web3 industry is facing a tough time and we all need to start focusing on the bright side of it. And believe me, there is a lot to be focusing on.

I believe that the concept of a tokenized world is going to be one of the most powerful applications of Blockchain and Web 3.0. But that is just a personal perspective.

Before that, let’s look at the

Global adoption

• Microsoft, AWS, Google, and all major tech giants offer some kind of Blockchain service either as infrastructure or as an enterprise solution.
• IBM is one of the most significant contributors to the Hyperledger foundation, a consortium of projects providing different applications for multiple industries.
• In the financial sector, HSBC, Bank of England, Visa, Mastercard, JP Morgan, and the list goes on. This industry has specifically witnessed an exponential adoption of Blockchain in one form or another.
• Nike, NBA, and the cricket industry, what all do they have in common other than great sports shoes? NFTs built on Blockchain.
• Do you use Meta, Instagram, or Twitter? They all have started not just integrating but also offering Blockchain-based features such as NFTs as profile pictures.

Now, let’s see how governments are adopting this technology

• When it comes to governments, mentioning UAE and Estonia becomes obligatory considering their priceless contribution to the space such as creating a nourishing environment for blockchain startups and the e-residency program.
• However, when it comes to using Blockchain for streamlining financial payment infrastructure, countries like the Bahamas, Australia, Japan, Bahrain, and even India are leading the wave through the idea of creating a Central bank digital currency or a CBDC based on Blockchain.
• Switzerland has been actively working on issuing digital identities on Blockchain apart from its numerous initiatives.
• Other countries, like Russia and the USA, have considered using Blockchain for democracy and decision-making including a pilot blockchain-based e-voting program in Russia in 2021. Quite ironical.

The emergence of a tokenized world

With Blockchain offering a distributed ledger allowing users to maintain their data without the need for a governing body, little did we know that this concept can be the start of building a new world, or rather, rebuilding the existing world as we know it.

For instance, who would have thought that

you can join thousands of people online, pool together your money, buy a physical asset digitally, and own a fraction of it corresponding to your contribution in the pool?

All without questioning the authenticity of the asset as well as other users who joined anonymously.

Remember the old movies where an uncle or a close relative would deceive the main character and get signatures to transfer the assets in their own name? Well, Blockchain does not allow that anymore. Better think of a new storyline.

In essence, an asset is represented on top of the Blockchain using tokens. These tokens are just integers that carry some value defined in the data associated with the tokens and are kept on the Blockchain.

This data, as well as the token, is in the custody of an end user without any intermediary being involved.

A user can access this data through their credentials which, on the blockchain, are public and private keys. The same credentials allow the user to perform various functions on these tokens such as buy, sell, or transfer. All actions on the tokens are defined and executed by a piece of code called a smart contract.

Now, the tokens we are referring to are being used to represent an asset which means that each time an action is performed on the tokens, it is representing an action being done on the asset itself.

For example, A property in the Bahamas(choosing it for the obvious reason, hint: SBF) is costing 100,000 USD.

On a Blockchain, 100,000 tokens, say BHS, are created.

Each BHS represents 1 USD worth of the property and 10,000 tokens mean 10% of the total property(If this made you remember a token rhyming with the word Tuna, you are still focusing on the negatives).

Now, John creates a digital wallet on the Blockchain and buys 10,000 BHS.

John is now a 10% owner of this property in the Bahamas.

Let’s see the benefits John can enjoy due to this token system.

1. John does not need to buy the whole property as he can buy a fraction of it.
2. John can buy the tokens from anywhere in the world without any heft paperwork as a smart contract and a Blockchain network are responsible for maintaining the security.
3. John can access his investment anytime he wants, from anywhere in the world.
4. He can transfer his ownership to anyone, with just a few clicks.
5. He can sell his share of the property at any time by simply selling the tokens.
6. In a normal scenario, the property might have been very expensive for John and even though it was a sure shot of getting great returns, John could not afford it. But now, with tokenization, he can buy a fraction and enjoy good returns without increasing his ticket size.
7. John enjoys unimaginable liquidity and flexibility.

Therefore, with tokenization, even an illiquid asset with challenging access due to geographical barriers becomes a great investment option.

Real estate is a very classic example of how tokenization is bringing a fundamental change in the world.

Other assets like Patents, solar energy, and carbon credits are the most suitable example of a new world being introduced with the inclusion of Blockchain.

In fact, the recent news about the Indian government approving the energy conservation(amendment) bill 2022 is the reason I wrote this article. This bill allows the setting up of a carbon credit trading market in India.

However, this also presents a unique opportunity to implement this market with the right technology at its core, for a better future.

Will we learn from our past mistakes like the stock market scam? that happened due to a ledger after all.