Decentralized Finance Ownership Tokens for Real-World Assets

One of the innovations that are exciting about Centrifuge and other similar collateral-asset systems is the blending of public and private data on privacy-enabled NFTs.

Decentralized finance has changed our financial world in a big way. The emergence of cryptocurrency and consensus-based verification, the innovation of decentralized lending, and other phenomena related to the blockchain are integrating new digital money systems, and making old traditional banking systems obsolete.

However, one of the average investor’s biggest concerns around decentralized finance is the volatility of cryptocurrencies and smart tokens.

In the open market, much of the value of Bitcoin or any other type of digital money is likely to spike and plummet based on changing market factors and the psychology of asset holders. As with individual equities on the stock market, the numbers go up and down a lot.

That makes traders nervous when they’re making a play on the cryptocurrency market itself, and trying to stay diversified in case the road gets rocky.

With that in mind, there’s another path that savvy investors are making toward decentralized finance assets that are collateralized by real-world assets.

Ethereum and Asset Tokenization

The basic idea here is that the digital coins and tokens that people are holding will have a value related to actual real-world assets like real estate, royalties, or intellectual property.

These real-world revenue streams get tied to the token or digital asset in a way that builds fundamental value into these systems, and importantly to some traders, that’s uncorrelated from the basic coin market itself.

Take the example of Ethereum, which is commonly known as the runner-up cryptocurrency in the market after Bitcoin.

The price of Ethereum’s coin Ether fluctuates a lot, too. Just a few years ago, ETH was worth dozens of dollars, and now it’s worth thousands. It goes up and down.

But people who really understand the nature of Ethereum know that it was built to handle smart contracts that can have value totally divorced from the value of ETH itself.

In other words, this type of blockchain behavior and asset holding is more geared toward facilitating a contract than it is to owning a digital coin. For example, if you hold an Ethereum token that is tied to real estate value, and ETH price drops, the housing market doesn’t. And your portfolio has a better chance of staying afloat.

Public and Private Data for NFTs

Let’s talk about another kind of functionality that is really helping the collateralized digital asset market to thrive.

Non-fungible tokens or NFTs are a big new thing in decentralized finance. These digital assets are essentially tokenized the same way that other collateralized assets are – maybe to a piece of artwork or something with collectible value.

One of the innovations that are exciting about Centrifuge and other similar collateral-asset systems is the blending of public and private data on privacy-enabled NFTs. In the peer-to-peer system, sensitive data for the holder is kept private, where tracking data, as per blockchain conventions, is public.

Here’s another example of revenue streams tied to collateralized digital asset tokens and smart contracts: It’s called invoice factoring. Invoice factoring companies sell the probability of future client payments and new smart tokens can attach to these real-world values as well.

Benefits of Collateralized Tokens/Digital Assets

It’s easy to see some of the real-world applications of these types of assets. For one thing, being able to trade in something that is supported by consensus-based verification systems provides an alternative to the many un-banked who are not served by traditional commercial banking systems. Scaling is easier and again, the volatility of a single cryptocurrency can be diversified into much stabler holdings.

next Altcoin News, Blockchain News, Cryptocurrency news, News

Having obtained a diploma in Intercultural Communication, Julia continued her studies taking a Master’s degree in Economics and Management. Becoming captured by innovative technologies, Julia turned passionate about exploring emerging techs believing in their ability to transform all spheres of our life.

Related Articles

ETX Capital Secures Juan Amiguet as Its New Head of Data

ETX Capital announced that it has secured Juan Amiguet as its new Head of Data, effective from July 2021.Finance Magnates recently learned that Juan...

Great Britain becomes first team at Tokyo Olympics to offer NFT

Great Britain (GB) became the first team to launch its NFT for fans at the Tokyo Olympics 2020. Team GB has partnered with the...

Ethereum EIP-3675 For ETH 2.0 Upgrade Launches On GitHub

The Ethereum Improvement Proposal (EIP) 3675 has now launched on GitHub. EIP-3675 contains the ETH 2.0 proof of stake merge that is coming to...

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest Articles

ETX Capital Secures Juan Amiguet as Its New Head of Data

ETX Capital announced that it has secured Juan Amiguet as its new Head of Data, effective from July 2021.Finance Magnates recently learned that Juan...

Great Britain becomes first team at Tokyo Olympics to offer NFT

Great Britain (GB) became the first team to launch its NFT for fans at the Tokyo Olympics 2020. Team GB has partnered with the...

Ethereum EIP-3675 For ETH 2.0 Upgrade Launches On GitHub

The Ethereum Improvement Proposal (EIP) 3675 has now launched on GitHub. EIP-3675 contains the ETH 2.0 proof of stake merge that is coming to...

Thesis Raises $21M in Series A Funding, Plans to Launch New Wallet

The CEO talked about the expansion plans of Thesis, stating that the company is looking to increase its current team of around 40 across...

Ripple-backed Tranglo Working on Something to Stir Up Fintech and Payment Industry

Founded back in 2008, Tranglo has grown to an international payment processing company with 1,300 payout partners.Tranglo, Asia’s leading cross-border payment hub, has announced...