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New Exchange to Offer Customizable Dashboards — Giving Traders the Information They Want

A company wants to stand out from ‘copycat’ exchanges by offering a customized dashboard where traders can decide the information they want to see.

A new exchange says it has the goal of becoming “the most professional, global and secure marketplace for digital assets” — utilizing state-of-the-art technology that it claims can deliver a processing capacity of 1.5 million order matches per second.

ProBit says its platform is “fast, robust and reliable” — helping to give its users an upper hand while trading. The company says security is a priority, and this is why it promises to store “95 percent or more of digital assets in a cold wallet” — protecting users against security breaches and theft. Hardware security keys are also being made available to traders, which are “impossible for hackers to crack,” yet convenient to use.

According to the company, many traders end up using multiple exchanges because they cannot find the trading pairs they want — or because the user interfaces are too difficult to understand. ProBit aims to remedy this problem through a modular dashboard — meaning that the layout can be personalized around the needs and interests of a trader. Instead of pushing the same information to every user, Probit appreciates different crypto enthusiasts are interested in different things, and wants to put the power in their hands.

Through ProBit, “a wide array of the most trusted coins and tokens on the market” can be traded — and the company says that more than 150 cryptocurrencies will be available. This is complemented by hundreds of trading pairs. Five of them — Bitcoin, Ethereum, USDT, EOS and the native ProBit token among them — serve as “base currencies.”

Customizable user interface for traders of all levels

According to ProBit, many of the exchanges out there at the moment are failing to hit the sweet spot when it comes to attracting users from all backgrounds. It says that, as a rule, most exchanges are geared toward inexperienced traders or experts. Although some platforms do enable traders to toggle between basic and advanced modes, the ProBit says this just means that every user is not getting what they fully need.

This is the rationale behind the fully customizable interface. Every component can be moved and resized as per their priorities — enabling traders to benefit from a service that acts as the left hand to their right hand. This personalization even extends to the colors used on tickers, giving users the chance to find a layout tailor made for them.

Of course, using a crypto exchange for the first time can be a daunting experience — and this is why ProBit offers an array of preset layouts for new users. This serves as a starting point which enables traders to figure out how they want to lay out the vast amounts of information that the company exchange has to provide.

ProBit says that its platform will be active 24/7, and customer support will be available in multiple languages — cementing its goal of becoming a global exchange.

A global player

The company is clear that it wants to be more than a copycat exchange that seems to offer identical features to the platforms already out there. ProBit says this ambition is going to be realized thanks to its team of executives. While CEO Hyunsu Do worked as an accelerator for fintech and blockchain-based companies, CTO Steve Woo amassed 25 years of experience in the software industry thanks to his tenure as CEO of Linux International.

The main sale of ProBit tokens — known as PROB — is taking place on Dec. 3, 2018 and will last for only one day. The company stresses that these tokens are never going to be used for marketing or bounty services. Moreover, its team adds that they are not going to charge listing fees for projects to be traded on ProBit for three reasons: to protect users, because it amounts to a conflict of interest and because it enables them to be selective.

Ronald Chan, the director of partnership for ProBit, shared that projects from around the world have submitted themselves for listing on ProBit because of the co-marketing campaign that ProBit and crypto projects will conduct together. He added that this win-win partnership raises the visibility of both parties.

 

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.

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Bittrex Could Eclipse Coinbase With Its New Partnership With Rialto Trading

The beauty of Twitter is that news spreads like wild fire. It is with such speed that Weiss Ratings highlighted a Bittrex partnership that might have flow under the radar of many crypto fans. In the tweet, Weiss Ratings stated the following:

U.S.-based cryptocurrency exchange Bittrex is partnering with registered broker-dealer Rialto Trading to offer a trading venue for blockchain-based digital assets. #Bittrex is going for the kill – #Coinbase, watch out!

One response to the tweet suggested that Coinbase had already shot itself in the foot by not listening to its user base. This tweet can be regarded as referencing recent reports that Coinbase’s revenue has declined by 83% since the bull run of December last year. The full tweet can be found below.

Bittrex teams Up with Rialto

Digging further into the partnership between Bittrex and the registered broker-dealer known as Rialto Trading, we find out how important it is for it will provide an avenue for the trading of blockchain-based digital assets that are registered securities or could be classified as such in the future. According to reports, both firms said they were in talks with regulators but could not give further indications as to when they might be approved for launch.

The report would also add that:

Rialto runs a U.S.-registered trading platform for fixed income products and, pending approval from regulators, will expand its operations to include virtual tokens that are registered securities.

The venue will be open to institutional investors, corporations, U.S.-registered broker-dealers and accredited investors – who must meet U.S. securities regulations for annual income of at least $200,000 or a net worth topping $1 million.

The last statement shows that both Bittrex and Rialto, have identified a niche in the market that needs to be filled. With regulators increasing their scrutiny on cryptocurrencies and blockchain industry, there is a huge chance that some of the tokens out there will be classified as securities and need to be regulated accordingly. With such regulation comes the need for a platform to trade the blockchain based securities.

Bittrex CEO, Bill Shihara, would add that:

We’re merging Bittrex’s technology, cybersecurity and blockchain expertise with Rialto’s deep knowledge of the securities industry.

This can only mean that Bittrex is going to become the first crypto exchange to cross over to the world of traditional trading where the ‘big boys’ of Wallstreet hang out with all the institutional funds. This news comes after Bittrex added XRP/USD pairings before Coinbase as well as Ripple partnering with Bittrex to power xRapid transactions in the United States.

Disclaimer: This article is not meant to give financial advice. Any opinion herein should be taken as is. Please carry out your own research before investing in any of the numerous cryptocurrencies available.

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Blockchain Firm to Raise $24 Billion for Electric Bus Upgrades in China

Blockchain and AI technology company Seven Stars Cloud Group has scored a $24 billion deal to help finance large-scale electric bus upgrades for China’s biggest full-service operator.

According to a press release published Monday, under an exclusive contract made with the National Transportation Capacity Co Ltd (NTS), Seven Stars Cloud will issue fixed income lease financing-based products through its regulatory complaint blockchain ecosystem, including one campaign based in China and the other open to the global markets.

More specifically, through the China-based and international funding campaigns, Seven Stars Cloud – a public company traded on Nasdaq – plans to raise estimated $8.75 billion and $15 billion over the three-year time period, respectively. While, for the China-based financing, SSC will focus on the sale of fixed income products, for the international markets, SSC will provide both fixed income and asset digitization products.

NTS is China’s largest full-service operator for electric buses, according to the release. It also offers sales, lease financing, a charging station network, and real-time data services.

Bruno Wu, chairman and CEO of SSC, said that such a large-scaled and asset-backed contract is “groundbreaking” for blockchain-backed fintech companies around the globe.

He added:

“It will serve as a window to the world on how asset value and liquidity can be unlocked by traditional industries as we take fixed income products into the digital era.”

The partnership comes amid China’s plan to replace all buses with electric buses by 2021. The market size for the replacements and upgrades to achieve fully-electric bus operations in China is estimated in the announcement at about $145 billion.

Electric bus, Shanghai, image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Breaking: Owner of NYSE Partners with Microsoft, BCG and Starbucks to launch a Global Bitcoin Market

Intercontinental Exchange (ICE), the owner of the New York Stock Exchange (NYSE), is partnering with Microsoft, Starbucks, BCG and others, to launch a market and ecosystem to list physically settled Bitcoin futures contracts and for a new company to push Bitcoin and other digital assets towards becoming mainstream financial asset.

The new company will be known as Bakkt and intends on leveraging Microsoft’s could solutions to create an open and regulated, global ecosystem for digital assets. The integrated platform will enable consumers and institutions to buy, sell, store and spend digital assets on the seamless global network.

Kelly Loeffler, CEO of Bakkt, is quoted as saying the following with regards to the new company:

Bakkt is designed to serve as a scalable on-ramp for institutional, merchant and consumer participation in digital assets by promoting greater efficiency, security and utility. We are collaborating to build an open platform that helps unlock the transformative potential of digital assets across global markets and commerce.

Bakkt will initially integrate with ICE’s U.S futures market and clearinghouse to list a physically settled one-day Bitcoin futures product. This will include physical warehousing managed in-house by ICE. This new product is slated for launch in November and is awaiting regulatory approval. In addition to the Bitcoin futures product, Bakkt will be a full-fledged platform to promote the adoption of digital assets as mainstream financial assets as earlier mentioned.

Jeffrey C. Sprecher, Founder, Chairman, and CEO of Intercontinental Exchange, is quoted as follows with regards to the launch of Bakkt:

In bringing regulated, connected infrastructure together with institutional and consumer applications for digital assets, we aim to build confidence in the asset class on a global scale, consistent with our track record of bringing transparency and trust to previously unregulated markets.

Maria Smith, Vice President, Partnerships and Payments for Starbucks, explained how the company will play a role in the partnership:

As the flagship retailer, Starbucks will play a pivotal role in developing practical, trusted and regulated applications for consumers to convert their digital assets into US dollars for use at Starbucks.

As a leader in Mobile Pay to our more than 15 million Starbucks Rewards members, Starbucks is committed to innovation for expanding payment options for our customers.

Similar sentiments were echoed by Sean Collins, Senior Partner, BCG:

Blockchain technology holds tremendous potential to enable new business models and trusted ecosystems. By leveraging and developing fundamental market infrastructure, the Bakkt platform will enable firms across industries to accelerate a range of innovation.

Other investors in Bakkt are expected to include – but not limited to – an affiliate of Fortress Investment Group, Eagle Seven, Galaxy Digital, Horizons Ventures, Alan Howard, Pantera Capital, Protocol Ventures, and Susquehanna International Group, LLP.

More information with regards to the launch of Bakkt will be announced in the coming weeks.

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Neo (NEO) Best Opportunity to Step in, Latest News

With the market slightly reversing in prices after the experienced losses for the past few weeks, this could be the best moment to not let the train go by. For many the present token movement could equal to loss, however for others it represents a perfect window to get themselves involved. And with all the crypto-altcoins making major movements in the industry, there are plenty of options out there.

 NEO Potential

When the coin prices are dropping, most turn to the technological strength that sleep behind the cryptocurrencies. As altcoins are doing major infrastructure/network development, traders are turning their eyes towards as opposed to Bitcoin. Still, the lead impacts the prices the most.

During the bullish trend in the crypto sphere that occurred in December 2017, and in the early month of this year (February 2018), the price of NEOincreased considerably at $187 and its market cap at that time was about $5 Billion. The crypto held its momentum towards Bitcoin’s price downtrend, thus, falling to a price tag of $144 by late February.

It is important to keep in mind that only in the last seven days the total market cap has increased from $250 bil to $275 bil. The price of NEO is at $35.95 against the US Dollar. If everything goes well for the second part of the year, this is the moment to go in.

Source: coinmarketcap

NEO Latest

NEO recently began the election of a City of Zion consensus node into its mainnet. However, this occurrence serves as the avenue for the decentralization of its blockchain network.

To have it clear, the above mentioned City of Zion are an independent group made of translators, designers and developers with a global reach that have teamed up to back up NEO core and the network as a total.

“We have to be very careful with decentralization of the consensus nodes, because the protocol of NEO is evolving very fast. We need those consensus nodes to act very quickly to upgrade, and if there is a bug or a security issue, we need them to respond very quickly. So we’re doing the decentralization process slowly, gradually and very carefully.” – Founder of NEO – Da Hongfei

160 teams are competing to develop the most engaging gaming applications based on the NEO blockchain network.

The competition, run by NewEconoLab, is trying to make the network famous among game developers and the gaming community. According to its rules, all games must be open-source and NEO-blockchain based, with assets, behavior data and game logic being put on the chain. Registration opened in May.

 The rebranded Antshares – NEO is in a similar position as various successful Chinese firms as it aims to be a platform for a smart economy through its NEP-5 tokens. Very-ecosystem impacting were various ICOs that were executed on the platform like Deepbrain Chain, Qlink and Ontology. It runs on the Byzantine Fault Tolerant consensus function, by which it is targeting to offer solutions for the Byzantine Generals Problem.

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A16z Leads Investors in $20 Million ICO for Tokenized Assets Platform

Asset tokenization platform TrustToken just raised $20 million in a strategic token sale with the help of major venture corporations, including Andreessen Horowitz (a16z).

The startup announced Monday that the cash raised in the funding effort, which was also backed by BlockTower Capital and Danhua Capital, will be used to continue developing its platform, which seeks to list different tokens back by physical assets, according to a press release.

TrustToken has so far released one such token already – a “stablecoin” called TrueUSD, according to the release.

In a statement, TrustToken chief executive Danny An said:

“The support of these leading investment firms represents a significant step towards our goal to build a compliant tokenization platform for currencies, commodities, and real-world assets. We will draw on the combined expertise and network of these firms as we grow our industry partnerships and extend the reach of our first product, TrueUSD.”

The funds will also help TrustToken expand its legal, product and engineering departments, according to the release.

Ari Paul, managing partner at BlockTower, spoke to the potential of blockchain technology and the reasons for the investment in a statement, stating that “tokenization of real-world assets will produce value much in the same way that ‘equitization’ did.”

“We can now buy fractional ownership in a basket of commercial office buildings or commodities via equity instruments,” he continued. “Tokenization will further reduce friction in asset trading and ownership.”

USD image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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A Porsche Speedster Is Turning Into Tokens on a Blockchain

TEND, an ethereum-powered marketplace for sharing “tokenized” luxury goods, has partnered with a Porsche dealer based in Switzerland’s “Crypto Valley” to put a sports car on a blockchain.

The startup’s founder, Marco Abele, who previously served as chief digital officer for Credit Suisse, told CoinDesk that TEND is collaborating with Porsche Zentrum Zug in order to offer a 1956 Porsche Speedster 365A as the app’s first tokenized car.

The luxury car will be split up into token-based shares to be registered and traded on TEND’s automated marketplace. The platform hosts share-owners and a variety of service partners, while its use of a blockchain also provides a transparent account of assets’ histories.

Abele said that through fragmenting ownership, the TEND app fulfills the “modern generation’s” desire for luxury assets, while simultaneously expanding access to them.

“It’s tokenizing luxuries and very precious assets to bring them into co-ownership and onto the blockchain, and then our unique proposition is to give a full life experience on top of this investment and to enable that experience via service partners,” he said, adding:

“So what we want to enable people to do is not only to own a beautiful object, but to then really touch and feel it.”

Dealer role

Porsche Zentrum Zug will facilitate the crossover from asset to experience with the tokenized Speedster.

The dealership will handle everything from handing over the keys to share-owners to the maintenance of the car, the management of which is executed using smart contracts.

“We try to be a physical platform for an app, or a community around an app that’s otherwise going to be rather anonymous,” Yves Becker-Fahr, Porsche Zentrum Zug’s general manager, told CoinDesk.

Becker-Fahr explained that TEND’s emphasis on experience is also one reason that it initiated a relationship with an individual dealership and not the whole Porsche corporation.

“What the people at TEND wanted was a very personalized and individualized link to us here at the Porsche center,” he said. “It’s really important that we start with a particular car, a particular Porsche center that stands behind it and takes care of it and knows the history and specifics of the car.”

More assets to come?

TEND and Porsche Zentrum Zug both said they are eyeing plans to bring more cars onto the platform, and TEND is in talks with a number of other brands with the hope of tokenizing a wide variety of assets, ranging from jewelry to art and photography.

Likewise, though this is Porsche Zentrum Zug’s first engagement with the technology, its proximity to industry hotspot Zug means that it has many customers linked to the technology.

According to Becker-Fahr, the dealership is also open to the other potential applications of blockchain.

“We have started thinking about it, yes, whether one day we might have to offer to our clients to pay with cryptocurrency. But it would be too soon to say that we’re on the cryptocurrency train,” Becker-Fahr told CoinDesk, adding:

“This is the start for us, working together with TEND. At this point in time, we don’t know where it will lead.”

Image courtesy of TEND

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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Token Trader Templum Just Bought a Broker-Dealer

Blockchain startup Templum has acquired Liquid Markets Group’s broker-dealer and alternative trading system Liquid M Capital LLC.

The regulated “tokenized asset” trading platform hopes to enable users to trade cryptocurrencies in compliance with U.S. securities regulations, notably treating digital assets as securities, the company announced in a press release today. Prior to the acquisition, Liquid M was a partner to Templum, enabling it to act as a digital exchange.

Liquid M is a part of both the Securities Investor Protection Corporation, a non-profit organization set up to protect customers in the event a broker-dealer fails, and the Financial Industry Regulatory Authority (FINRA), a self-regulatory group aimed to protect investors from malicious securities firms.

Liquid Markets Group chief executive Vince Molinari said in the release that combining Templum’s team with Liquid M’s existing alternative trading system (ATS) and other assets will help “position Templum to drive the evolution of this asset class.”

He continued:

“We believe Templum’s platform, standardization and commitment to investor protection will make Templum the leader in facilitating the offering and secondary trading of digital assets offered as securities.”

Last October, Templum raised $2.7 million in a seed funding round, which it intended to use to launch its trading platform. At the time, the firm’s founder and CEO, Chris Pallotta, said that utilizing an ATS allows Templum to provide investors protection from possibly risky initial coin offerings.

The announcement is notable for its timing, coming just a day after U.S. Securities and Exchange Commission chairman Jay Clayton noted that no company offering an ICO had registered their tokens as securities to date. During his testimony to the U.S. Senate Committee on Banking, Housing and Urban Affairs, he stated that every ICO he had seen looked like a security offering.

Handshake image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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Blockchain Asset Registries: Entering the Slope of Enlightenment?

Juan Antonio Ketterer and Gabriela Andrade specialize in financial markets for the Inter-American Development Bank, the largest source of development financing for Latin America and the Caribbean.

The following article is an exclusive contribution to CoinDesk’s 2017 in Review.


Improving access to productive finance in Latin America and the Caribbean is the bottom line of our work.

The reason is simple: access to finance is essential for an economy and, therefore, a key determinant of its productivity and economic growth. The problem is that the financing of productive activities, particularly small- and medium-sized enterprises (SMEs), can be jeopardized by issues related to the quality of information and contract execution, which hinder the tasks of credit selection, monitoring and asset recovery.

This, in turn, drives up financing costs and sometimes it makes financing inviable. This problem is particularly prevalent in Latin America and the Caribbean, where it’s critical development challenge that needs to be solved.

It is thus not surprising that over two years ago we got very intrigued, and eventually rather enthusiastic, about the potential of blockchain to address these problems. We became the first among multilateral development institutions to entertain the idea that if there was one strategic use case worth piloting, it was blockchain for asset registries.

Importantly, though, we were not restricting our thoughts to land registries. These class of registries have been one of the most discussed applications, but they face severe challenges in our region given the particular nature of that specific asset and the registry: blockchain cannot not solve the “original owner” problem should disputes arise.

We refer here to a broader class of assets, such as moveable assets, warehouse receipts, invoices, etc., that could be used as collateral to access finance but remain largely untapped because their registries are untrusted and costly to operate, the information is difficult to verify and are prone to fraud.

Enter blockchain.

The promise

At a conceptual level, it is not difficult to see why the properties of blockchain make it particularly suitable candidate for the task of maintaining a collateral or asset registry:

  1. The system is resilient, without a single point of failure or corruption
  2. Cryptographic proofs provide integrity to the information contained in the ledger
  3. The information is traceable and auditable, thereby providing enhanced transparency.

Moreover, smart contracts can further contribute to the efficiency of asset registries by allowing automatic execution of pledged collateral or its automatic un-pledge and re-pledge. These properties can dramatically decrease the costs associated with collateral management and improve efficiency.

The premise then, seemed clear: More transparent and more efficient registries of assets pledged as collateral could diminish constraints rooted in information asymmetries and thus facilitate access to finance.

In other words, if blockchain could facilitate more accurate and trusted information regarding borrowers and contract execution, there would be many more SMEs in the economy that could access credit. This quickly evolved into a project with a vision: support the development of a foundation for a public, open-source infrastructure for asset registries using blockchain designed to support different applications for different type of assets, and implement a pilot to test it.

What ensued was a journey that, frankly, was very similar to the famous Gartner hype cycle in the sense that while we began intrigued, we quickly got very excited and eventually a bit disillusioned.

The certification problem

There were different drivers that took us to the “trough of disillusionment,” continuing with the analogy.

First, the avalanche of positive news that started in mid-2016 regarding the successful use of blockchain in different applications contributed to our inflated expectations.

But, we soon discovered that this news mostly referred to proof-of-concepts that were far from being piloted in real life, let alone in production. While this did not affect our intention to continue with the project, it showed us that there were not that many precedents we could built on.

Second, during the process of actually designing the project, we started to realize that the devil is in the details, and that very few people were talking about these details. For instance, the “garbage in-garbage out” problem is not easy to solve. The objective is to have more trusted and transparent asset registries, but it all depends on whether the initial information registered is correct or has not been altered.

The problem is that, at least at the entry point, we still need to engage and trust third parties that the technology is touted to eliminate. And while there are interesting and novel ways to use different technologies to put a limit on potential corruption at entry, at the end of the day this problem is not fully solved, and if garbage gets in, it will get out, and possibly on a higher standing as it was “blockchain certified.”

Nonetheless, if the entry point issue is solved, then the system is indeed helpful as it will provide integrity to the information.

Practical concerns

More broadly, though, there are several issues arising from the “off-chain/on-chain” interactions, especially when the main data resides, and the main transactions occur, off-chain.

A promising avenue to address this problem is to design the off-chain transaction systems in such a way that they automatically generate smart contracts to settle the transactions on chain, but this is the subject of further research that we are conducting.

Another major, practical, issue relates to the costs and uncertainties when undertaking a pilot in the real world, even more so in the context of a developing economy. Let’s start with transactions costs. Imagine we want to use the bitcoin blockchain.

Well, the price per bitcoin has increased more than 2,000 percent since we started thinking of the pilot, and despite batching and other techniques, the price increases and volatility of public blockchains affect transaction costs for a project like this, and they are not easy to plan or budget.

This holds true even in hybrid models because even if most activity occurs in the private blockchain, a reference still needs to be registered in a public blockchain. But well beyond these transactions costs, running a blockchain pilot does not come cheap.

A pilot, by definition, entails a small-scale, short-term experiment undertaken to learn how it might work in practice. This means that whatever system is built to be piloted, it would need to operate as a mirror of current systems.

Furthermore, a pilot like this needs to connect the systems of several stakeholders (for instance financial institutions, government dependencies, users and other players, depending on the use-case), which is usually not easy or cheap.

Charging ahead

Yes, undertaking a blockchain pilot entails investing a non-trivial amount of resources. Moreover, there is a multiplicity of risks to plan for and the reality is that the conclusion of the pilot might not be positive.

So, is the endeavor worth the cost and the trouble?

We think it is indeed. Not only because the potential development gains can be very high if it works, but because right now there is need for more basic research and experimentation with blockchain without worrying about direct commercial applications.

Moreover, the timing is ripe for pursuing an initiative aimed to support and test an open-source, public infrastructure that allows for greater innovation at the edges (i.e. the application layer), while offering the opportunity to start thinking about standards at the foundational level.

Also, the trait of an extensible, open and public infrastructure is very relevant for applications that entail public interest or development objectives, as the main code can be reused, improved, and adapted to the specific needs of different countries.

As such, and considering that many asset registries would benefit from enhanced auditability, traceability, and transparency, through this project we seek to contribute to the pioneer testing of blockchain in registries with high development impact potential.

We are hopeful that, if all works as intended, we will be able to enter a plateau of productivity sooner than later.

See a different path for the industry? CoinDesk is accepting submissions to its 2017 in Review. Email news@coindesk.com with an original pitch to learn more.

Abacus image via Shutterstock

The leader in blockchain news, CoinDesk strives to offer an open platform for dialogue and discussion on all things blockchain by encouraging contributed articles. As such, the opinions expressed in this article are the author’s own and do not necessarily reflect the view of CoinDesk.

For more details on how you can submit an opinion or analysis article, view our Editorial Collaboration Guide or email news@coindesk.com.

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Tokenization Will Make Assets More Valuable

Dr Pavel Kravchenko holds a PhD in technical sciences and is the founder of Distributed Lab.

In this opinion piece, the first of a two-part series, Kravchenko argues that tokenization of assets using blockchains will have more profound effects on the world’s markets than simply reducing back-office record-keeping costs.


Would you swallow a random pill that you saw on the counter in the pharmacy? Of course not. You don’t know anything about it!

But what if this pill came in a package with details from the manufacturer? And you had a prescription from your doctor? Further, what if you could independently test the pill’s chemical composition and make sure it matches the label and prescription? Or (flash forward to 2049), suppose you could verify that the chemical composition of the tablet is suitable for your DNA and confirmed by clinical studies.

Would that pill be more valuable to you? Undeniably. Its value increases depending on how much reliable information about it you have, even though the properties of the pill did not change.

Today, financial assets are too much like that loose pill on the counter. You don’t know enough about where it’s been, what’s in it, or what it will do to you.

But the process we call tokenization is going to make many assets a lot more attractive to a lot more investors, in part by providing an unprecedented level of information.

Why crypto took off

Stepping back, let’s consider the legacy financial system. Quite apart from information asymmetry, there are other forms of friction that discourage investment.

Even though we tend to think the global financial markets are as liquid as possible, that is only actually true for people and organizations already in the “system” – i.e. brokers and financial institutions. The end client is forced to go through all the levels of hell in the form of know-your-customer (KYC) and compliance checks at each and every opening of an account, signing of contracts, paying of commissions, etc. This also applies to investments into growing enterprises, access to which is only granted to accredited investors.

Strict regulation of the market for end users has led to demand for alternatives, which has unexpectedly let off steam through the cryptocurrency market. As soon as people started to believe that this market let them not only enter, but also withdraw freely, liquidity surged, cryptocurrency grew by factors of 10, and the number of initial coin offerings (ICOs) rose by more than hundreds per month.

Despite the hype and inevitable disappointment in investing in totally unregulated assets (where the level of fraud constitutes 90 percent, according to the People’s Bank of China), it is clear that the democratization of trade leads to a sharp increase in the attractiveness of assets. Every business or nation would, or should, like this to happen in its economy.

Barriers to exchange

As someone who, for a couple of years, was involved in the equities market, I can say red tape is the main reason why a client can change their mind about opening an account.

A secondary issue is by a low usability of trading software – it is necessary either to study up or to entrust the work to a third party.

More fundamental problems – such as the need for trust in intermediaries, poor infrastructure integration, and the speed of settlements – are in third place.

Indirectly, tokenization has created a fashion for extremely simple, convenient systems, where within 20 minutes you can get money on the exchange, trade, and withdraw capital. Of course, there is a risk that it will never be possible to withdraw money, but it is sometimes easier to accept such risk than the infinite dragging-on of undergoing compliance procedures.

The age of tokenization

One way or another, a term appeared in the blockchain space that had been coined, as it were, in the security management process. Balances of accounts on blockchains began to be called “tokens,” due to the fact that they were items to be simply and safely transmitted. In essence, tokenization is the process of transforming the storage and management of an asset, when each asset is assigned a digital counterpart.

Ideally, everything that happens in a digital accounting system should have legal implications, just as changes in a real estate register lead to a change in ownership of land. The age of tokenization introduces the important innovation that assets are managed directly by the owner instead of managing assets through issuing orders to a middleman.

The difference in approaches is easily explained by the example of the difference between the banking system and bitcoin. With a bank account, the client sends an instruction to a bank where it is executed by someone, and the client identifies themselves through their login and password. In the case of bitcoin, the transaction initiator uses their digital signature, which in itself is a sufficient condition for the transaction to be executed.

Nothing prevents the use of the same mechanism for traditional asset management. Certainly, this will require a change in infrastructure, but will bring many benefits. It will reduce costs, and increase the speed and security of trades.

Every trading infrastructure includes a depository, an exchange, a clearing house and client software. Tokenization assumes that all these components will be far more integrated. And blockchain technology will allow decentralizing the entire infrastructure, distributing the storage and processing functions between all the parties involved. This decentralization will make the system more resilient, since there will be no single point of failure; it will reduce the need for trust in a central provider; and it will allow instant audits, since multiple parties have real-time access to the ledger.

Unexpected results

In addition to the most obvious benefits from the transition to a digital domain – increased speed, security and convenience of operations, as well as less need for intermediaries – tokenization allows unexpected results.

Among them is the addition of properties of assets that are not initially inherent: the ability to prove the history of ownership, the opportunity to divide assets into the smallest fractions (bitcoin, for example, is divisible to the eighth decimal), and the ability to integrate principles of management into the asset itself. For example, suppose there are several partners in a real estate development who need to vote on a proposed renovation. With a wallet that holds their tokenized property, they can take the vote more efficiently, without having to meet face-to-face or trust a proxy to represent their wishes.

All these things will make a tokenized asset more valuable than a non-tokenized asset with the same fundamentals, just as easy access to reliable information about a pill would give you more confidence to take it.

In the next article of this series: What stands in the way of tokenization.

Pills image via Shutterstock

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