Innovation in the 21st century revolves around creating better opportunities, whether liquidity, global access, a fair economy, comfort, control, optimisation, or financial freedom.
Tokenisation – a process of creating digital assets, is becoming a critical chapter unfolding in the new financial paradigm. However, the spotlight falls on a subset of this concept, focusing on representing real-world assets in the digital space. As a result, a new financial opportunity has emerged using old and proven asset classes by simply representing these assets through digital tokens.
While real-world asset tokenisation is revolutionary, its true purpose remains a mystery to many. Beyond financial opportunities, real-world asset tokenisation is about creating a borderless, fair economy using Blockchain and Web3.0.
Let us understand the essence of this digital economy by applying this concept to a sector that is in dire need of not just greater digitalisation but decentralisation for trust, transparency, and global inclusivity.
The Maritime industry is the perfect example of how real-world asset tokenisation goes beyond just real estate or art and opens up a new asset class to be explored by anyone and everyone.
Before jumping into the maritime sector, let us understand how tokenisation works.
Breaking down into three main steps:
It all starts with some maths. Elementary, basic maths.
With smart contracts, integer values are created in a digital network that carries some information. These are called tokens. The most commonly used token is the ERC-20-compliant digital token that stores information about the asset, such as token value, owner, and public address of the token.
Next, the tokens are created by defining an economic model called tokenomics. This describes the supply of the tokens, their transfer characteristics, and several other features required to ensure that the token operates in a regulated and sustainable manner.
The third and final step is to assign real-world value to these tokens. Without real-world value, these tokens are just integer values. Therefore, the tokens are used to represent the ownership of the asset which is being tokenised. For example, if 100 tokens represent the asset, each token represents 1 percent of the asset’s owner. This ownership and a physically regulated paper trail are well-defined in the Blockchain’s ledger.
Tokenising assets comes with a contemporary twist for uniqueness. The tokens are on a decentralised digital network and serve as a store of value alongside the carrying rights of the assets they represent. At the same time, the real-world assets represented by tokens continue to exist outside the network. Therefore, any action taken on the tokens directly impacts the asset and vice versa.
Some key aspects of real-world asset tokenisation
The combined price of all the digital tokens must be equal to the value of real-world assets being tokenised or equal to the value of the shares of tokens issued for representation.
Individuals interested in the partial or complete ownership of these assets can purchase their desired amount to own digital tokens. This requires the user’s public and private keys; just like owning a share traditionally, the user needs an authorised id and a bank account. These public and private keys can be created by creating a digital wallet.
Token Type: The token type plays a major role in defining the whole ecosystem. Depending on the use case, it can be a security token, a utility token, or any other type.
Token Standard: One of the most crucial parts of tokenisation is the Token standard. These are a set of rules defined in an immutable smart contract. Following a token standard creates uniformity in the digital ecosystem and allows the tokens to be traded with other tokens following similar standards. Other widely used token standards are ERC20, ERC721, and ERC1155.
Blockchain Platform: If you buy a car and first give a thought about its fuel type being diesel, petrol, electric, or gas, you know your decision is critical to your lifestyle. Similarly, a Blockchain platform is fuel for the whole ecosystem. There are multiple options to choose from, having their pros and cons. Some popular examples include Ethereum, Matic, Solana, Algorand, Cosmos, Polkadot, and Avalanche.
Asset Tokenisation in Maritime Industry
The Maritime economy operates within a system of rules and regulations, so smart contracts of the new world being created by Blockchain and web3.0 become an obvious choice for this industry.
Because the maritime industry is facing major challenges because of the dated nature of its systems, Blockchain and Web3.0 come as not just an innovation but a revolution.
Around 80% of global trade is carried via sea, but it still falls under a traditional setup that largely depends on the manual configuration for everyday activities. Resulting in irregularities and delays that cost millions of dollars to the shipping industry, creating a dire need for innovations & disruptions in the industry; Blockchain and Web3.0 have been welcomed with open arms.
Among a plethora of applications and innovations possible with the inclusion of Blockchain in the maritime industry, Asset tokenisation is where the secret lies.
If a maritime industry veteran found Aladdin’s lamp and could make one wish, this would be it.
Representing ownership of maritime assets through tokens in a borderless digital space with Blockchain technology is just a start of a new era.
Mentioned below are just a few examples of what real-world asset tokenisation can do for the maritime industry:
- Eradicate the need for heavy paperwork due to a comprehensive digitalisation process
- Borderless opportunity through a decentralised network accessible to anyone with a digital wallet
- Fractional ownership of high-value assets through tokenisation
- Enhanced liquidity due to the availability of digital exchange and trade of tokens
This is just a glimpse of how the maritime industry is experiencing major disruptions by adopting the latest technologies.
Applying Blockchain-based real-world asset tokenisation to maritime assets is a big step in creating a stable yet profitable alternative asset class. Moreover, this further opens doors to innovation, such as a secondary market for the maritime industry, giving access to millions.
Shipfinex is a digital exchange revolutionising the Trillion Dollar Maritime economy. Shipfinex is tokenising maritime assets & simplifying investments, enabling Instant Payments & a Decentralised marketplace by using defi & web3 technologies.
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Based in Singapore and Vietnam, Suraz Troy Kottakki is a serial entrepreneur in Financial technology, Digital identity and Health Tech. He is passionate about the Digital transformation of traditional industries such as Maritime, Capital Financing and Public Healthcare by deploying Web3 technologies. Suraz is currently working on creating a web3 infrastructure layer for the Maritime industry at Shipfinex, leveraging his deep global experience spanning nearly two decades in Shipping and Oil Trading at British Petroleum. Suraz is also dedicated to the long-term vision to bring digital health identity to all by 2030.
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