In a panel on the economics of tokenization at the World Token Summit 2023 event in Dubai, Participants discussed how tokenization adoption could be further scaled through tools like address tracing and forensics.
At the event, Cointelegraph spoke with Jeremy Firster, Global Head of Partnerships at the Cardano Foundation; Meng Chan Shu, Head of Business Development for the Ras Al Khaimah Digital Assets Oasis (RAK DAO); and Ellis Wang, who works with the executive and advisory team at The Private Office of Sheikh Saeed bin Ahmed Al Maktoum.
The group discussed various topics related to tokenization, including the benefits of digitizing assets and the challenges organizations may face when navigating the tokenization landscape.
At the start of the dashboard, Firster highlighted that the benefits of tokenization lie in the creation of profits. According to the executive, tokenization adds value by providing a tool for access, distribution of funds, and fragmentation of assets.. He explained:
“What tokenization represents is the ability to capture the digital identity of an asset, its ownership, its value and its history.”
As a contribution to the topic, Wang – who previously worked in the banking sector – highlighted that the main advantages of tokenization are transparency and security, characteristics inherent to blockchains. By putting the records inside the blockchain, the executive believes that tokenizing real-world assets naturally gives them several advantages, such as the flexibility that smart contracts bring.
After talking about your benefits, The executive also acknowledged the challenges for organizations that are riding the wave of tokenization. According to Wang, with so many emerging technologies, it’s hard to keep up.
Besides, Measures such as “Know Your Customer” (KYC) and “Know Your Transaction”, which ensure funds do not come from illicit sources, add another layer to the various challenges the space has to deal with. Despite this, the executive continues to believe that tokenization offers a great opportunity for many industries.
Firster added to the conversation that forensics could help broaden adoption. The executive stated that space has reached a point where it is possible to track addresses of very large entities. He explained that:
“It all revolves around the rules of how many prior transactions they need to look at to ensure these funds are clean and clear for use within a trade finance model.”
Firster noted that, With this, the question arises: “What information must be incorporated into the tokenized assets to make them compliant?”. For example, the panelist discussed tokens tied to real estate and said that there must be a way to determine on-chain whether an asset is genuinely connected to an off-chain asset. “So when we talk about digital signatures, we need to have a built-in identity solution, which is also part of KYC,” he said.
For his part, Shu agreed with the other panelists. The executive discussed what the community should focus on when it comes to tokenization. “You have to make sure that ‘that’ token is good for something,” she said. The executive pointed out that it is necessary to be aware of that purpose. Shu also encouraged the community that despite the challenges they may face as the world moves towards tokenization, they just have to “keep building.”
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