The Mainstream of Tokenization: Real Estate vs. Gemstones

Argyle Coin
Sep 6, 2018 · 7 min read

Asset-Backed Tokens: the Future of Tokenization

With the development of blockchain technology, the crypto community has embraced a range of new opportunities and options to trade and exchange cryptocurrencies in fast and secure way.

Ethereum appeared as a specially designed platform, enabling and facilitating the adoption of blockchain-based crowdfunding with the use of smart contracts. This has led to increased tokenization and token trade by way of a platform conditioned by the rising number of initial coin offerings (ICOs), or, more technically, TGEs (token-generation events).

Tokenization, now at the peak of its popularity, allows the issuance of a range of cryptocurrency assets (digital coins/tokens) for trade among investors. Thus, investors can acquire tokens as shares, or as a company investment. Accordingly, the company/project issuing the tokens can raise millions of dollars with the venture-capital crowdfunding model.

Why tokenization? Promoting tokenization on blockchain-based, decentralized networks significantly simplifies the process of trade and value exchange among token-holders. One is provided with fairer trading conditions, high throughput, efficient transaction processing, and lower fees.

Types of Tokens

According to Stanislav Sheliakin, Applicature business analyst, tokens are divided into the following types:

Source: Applicature, Medium: Token Economic Design

In order to promote speed and efficiency, a strong token has to serve multiple purposes, act as network fuel, predetermine economic rules, and support its native industry.

Asset value digitization is one of the crucial aspects of ensuring token-economics success. It provides flexibility into the future and enables fair exchange rates.

Let’s take a closer look at asset-backed tokens and their advantageous features.

Defining an Asset-Backed Token

Asset backed tokens (ABTs) represent assets as their digital footprint, with value guaranteed within those assets. Using the same logic, this also includes tokenized securities.

ABTs can be coherent with either a tangible or intangible body possessing a certain economic value.

Types of ABTs:

As long as an asset is digitized, its records and all relevant data gets recorded on the blockchain. Any property or object, for instance, can hold a digital record instead of common documentation. Further, an ABT holding and representing an object, a piece of real estate, or a commodity can be easily traded and exchanged between owners.

The Advantages of Asset-Backed Tokens

ABT advantages are as follows:

Liquidity

Liquidity is the process of efficient trade according to the general volume of market trade. This is one of the best features provided by asset-backed tokens, as the initial purpose of any asset is to increase its liquidity on the blockchain platform. With the advantage of liquidity, investors and market participants can easily and efficiently trade and exchange in the crypto market.

Securitization of Assets

Another advantage of a tokenized asset is that it allows multiple ownership of a certain object. In real life, this is possible, as well, though it requires much greater effort due to the complicated process of obtaining ownership rights.

Multiple ownership is enabled by token divisibility. Thus, a tokenized patent can be shared between contributors, with further proportional profit distribution.

Ownership Rights

One can possess full ownership of an object of interest and thereby avoid the risk of it being seized by the government. This is a great example of the benefits of decentralization.

Reduced Volatility

Price volatility is one of the issues currently reducing mass cryptocurrency adoption. Increased cryptocurrency volatility will remain until the development of a rationally enhanced, more liquid market.

ABTs commonly relate to the value of assets like real estate, precious gemstones, intellectual rights, etc., combining them with the attributes of decentralized blockchain assets. This combination ensures trustless transactions, securitization, and reduced crypto-asset volatility.

Definable Intangible Assets

Intangible assets are mostly used to purchase certain rights, patents, or other intangible things that are illiquid. Asset-backed tokens promote this type of trade and provide better asset transferability.

Having discussed the best ABT features, let’s compare the modern tendencies in real estate and gemstone tokenization.

Real Estate vs. Gemstone Tokenization

The tokenization of real estate has been pretty popular among investors due to the option of acquiring divisible and shared rights over certain types of property. An asset can be worth billions of dollars; thus, dividing property rights for it is advantageous. Thousands of investors can share its revenues and gain a share in the profits. Asset-backed tokens enable this option, and allow individuals to easily trade their shares on blockchain platforms.

Speaking of smaller real estate institutions, it is possible to acquire full ownership, thereby eliminating centralized involvement as well as the threat of governmental seizure. Additionally, blockchain platforms enable investors to trade ownership rights without third-party involvement.

Common Issues in Tokenizing Real Estate

Along with the above-mentioned advantages, there still exist certain disadvantages in real estate tokenization:

  • The complexity of reaching a common decision between a large number of investors. This brings about the necessity of setting up a voting system and special smart-contract execution, which takes additional time, effort, and money, both in terms of establishment and further use.
  • Real estate illiquidity. Real estate assets are non-liquid due to the fact that these sales take additional time to close, as market activity in this industry is somewhat low in terms of volume.
  • There also exist certain threats with regard to real estate objects, such as the possibility of damage, arson, or destruction due to natural disaster or other factors investors aren’t responsible for.

Gemstones and Precious Commodity Tokenization

The tokenization of gemstones and precious commodities has been gaining in popularity recently. The best advantage of asset-backed tokens correlated to the value of gemstones, for example, is that they can be sold easily and instantly with blockchain technology implementation. Considering that the trade, exchange, and storage of a large quantity of gemstones is complex in real life, blockchain contributes a secure, transparent tracking system along with added stability.

Gemstones and precious commodities can be traded without an intermediary, thereby eliminating issues of speculation and increasing liquidity with the use of asset-backed tokens.

In addition, tokenization is performed quickly and easily, guaranteeing full ownership rights and correlation to the commodity’s ever-increasing real price.

As of today, there exists a number of projects tokenizing the value of gemstones and precious metals.

The Argyle Coin is one of these projects, providing investors with the opportunity to trade and invest in rare fancy colored diamonds. Their rarity and beauty has resulted in constant price increases, showing a high demand in this product and bringing about the necessity of tokenization.

Currently, purchases of fancy colored diamonds are made in fiat currency. Therefore, adoption of a cryptocurrency based upon fancy colored diamonds is the obvious evolution for the community, especially from new, emerging markets with unstable currencies.

The Argyle Coin’s goal is for a new valuation to arise in the token, as more and more transactions in the diamond industry begin to use this new currency and the related smart contracts provided by the company.

Over time, value will move away from outside forces dependent upon paper currencies and begin to rely more on the wealth of the diamonds themselves, as well as an elite group of owners with enormous capital and long-term stability.

Historically, investment-grade diamonds have been highly resistant to devaluation. Accordingly, as the value of fancy colored diamonds rises, it is likely that the value of the Argyle Coin will also rise, especially if it gains ever-increasing adoption as the purchase instrument for trade and investment.

While other cryptocurrencies may run into issues due to a lack of differentiation (as many are not focused on any specific industry), the Argyle Coin is being designed from the ground up with the needs of the fancy colored diamond market in mind.

The new Argyle Coin (RGL) cryptocurrency token modernizes the old system of diamond payment and ownership with secure, instantaneous payment processing and a solid ownership verification structure. This universal cryptocurrency, which uses the same underlying cryptographic methodology and blockchain technology that currently secures Bitcoin and other cryptocurrencies, is both secure and unhackable. The Argyle coin will represent the value of a diamond by its asset-base nature, which will keep the price as stable as the diamond itself. In addition, it will function as a perfect trade instrument for diversification of risk, making it an even more profitable asset in each portfolio.

Like other cryptocurrencies, the RGL token will be able to effectuate transactions worldwide, and nearly instantaneously. In this case, RGL tokens will be used specifically to address the needs of the fancy colored diamond market, offering a convenient method of exchange for thousands of buyers and sellers simultaneously. One will be able to purchase diamonds with RGL tokens in order to eventually own them.

This investment option in gemstones has a range of advantages over real estate investments. Don’t hesitate to contact us for additional information! Visit the Argyle homepage to become better acquainted with the offers and bonuses it provides.

Argyle Coin

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Argyle Coin is the first cryptocurrency correlated to fancy colored diamonds. https://www.argylecoin.io

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