An Answer to the How of Intellectual Property
In our previous article, we’ve mentioned three reasons why intellectual property (IP) are valuable sources of investments. Yet, the million dollar value market still remains relatively untapped by investors due to the high costs it harbours and the inertia needed to get started. With the introduction of blockchain technology, however, the IP industry has turned into a treasure trove.
How Can Blockchain Simplify Things?
Blockchain technology is alternatively known as distributed ledger technology. As its name suggests, it is a technology that allows a single ledger to be spread across multiple peers in a network, with each peer having a copy of the complete ledger with real-time updates.
Translated into the traditional IP industry that has cumbersome processes involving multiple personnel such as bankers, lawyers and clients for their copyright and patent applications, what blockchain offers is a quick, accessible and transparent solution through smart contracts and asset tokenization.
1. Smart Contracts
Smart contracts are autonomous self-executing contracts written into the codes of agreement between two parties, often between the buyer and the seller. Unlike the opaque trade of IP that is multi-layered with lawyers, patent holders and buyers, smart contracts allow IP trade to occur in peer-to-peer transactions on an immutable database that is transparent to all. This makes the process much simpler without compromising its value.
2. Asset Tokenization
Another feature introduced through blockchain technology is asset tokenization. One inhibiting factor that prevent investors from investing in IP is the sheer amount of capital needed to get started. With asset tokenization, however, the cost of owning an IP is lowered as fractionalized ownership is possible. Instead of an investor pouring capital to wholly invest in one IP, the IP can be digitized as tokens on the blockchain with multiple investors chiming in as token holders. This greatly reduces the initial capital cost for investment with an additional benefit of higher liquidity.
With greater transparency and lower costs, the barrier of entry to investments in the IP industry has been greatly lowered, enticing most entrepreneurs and startups to list their IP online.
The next question that arises is this: Is there a blockchain-based platform out there that can facilitate IP trade and ensure the information stored is secure and safe?
The Missing Piece of the Puzzle: An Asset-Tokenization Platform
While asset-tokenization platforms have been on the rise in recent years, few have dabbled into the IP industry. Notable pioneers of the industry include companies such as Lexit and Polymath. Unlike Polymath that functions more as a platform for IP assets to release their Security Tokens, Lexit tokenizes one’s IP and facilitates IP trade between investors and companies.
Other platforms, in contrast, have chosen to tread on the path less travelled and offer a diverse set of assets to be tokenized on their platform instead of focusing on a single asset. These types of platforms may be more suitable for investors looking to have a diversified portfolio.
For instance, Konrad, an upcoming asset tokenization platform, offers asset valuation, asset tokenization and trading services. With the ability to support multiple assets on its platform, ranging from raw material assets, real estate to IP, investors who choose to pile their treasures on Konrad may enjoy a greater diversity of assets compared to conventional platforms, which may be just what they are looking for in their portfolio.
Conclusion?
Intellectual Property is a booming industry that holds tremendous potential for investors. Although every investment comes with its fair share of risks, losses can be minimised with blockchain technology. With lowered capital costs and greater transparency, investors are able to make better informed choices regarding their investments.
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