The Legend of the Token Prospector
Once upon a time, back in the Wild West, there were prospectors, solitary miners who went off into the mountains to hunt for gold. The prospector’s main job was to look for promising veins of ore, or rivers that could be panned. In the good old days, the prospector was more like a treasure hunter and adventurer, heading off into the wilderness with pickaxe, shovel, and pan to scout ahead of the miners. Today, the prospector’s job is comparatively boring, more of a scientist evaluating columns of data. And since most ore deposits are now known, or at least easier to find thanks to technology, it is now more of a legal and logistical matter as to whether or not you can get ahold of the buried “treasure”.
Shaky Assets and Wobbly Currencies
Thanks to the aftermath of the global pandemic, we are facing a time when global currencies could become unstable, or even disappear entirely. There are also an incredible number of financial products out there that are not actually backed by anything, just waiting for an economic wobble to send them tumbling down. This currency situation is particularly bad if you’re looking to save. Inflation shows us very clearly that fiat currencies like US dollars, Euros, and even the Swiss franc are not well suited to accumulating savings over the decades.
But everyone needs to save up in some capacity, wether for rainy days, or the challenging times we all may be facing soon. Ideally, these savings shouldn’t just vanish into thin air at the first hint of trouble, so the smart thing to do is to invest them some way. Since currencies and high-risk financial products that are not covered by anything don’t exactly meet the requirements for a safe or smart long-term investment, let’s consider some alternatives.
One of the most common alternatives is physically holding precious metals like gold, silver, or platinum. This, however, is probably not the best solution for most people, and certainly not in large quantities. At best, it’s wildly impractical; at worst, it’s a massive security risk (unless of course you happen to live in Fort Knox). The same problem applies to other physical assets, like art, vintage cars, real estate, etc. But this practical, physical problem is where Tokenization can help.
Tokenization Solves the Biggest Problem of Physical Assets
With the help of blockchain technology, large amounts of digital values, or tokens, can finally be stored safely and practically in one place, because all it takes is a digital key to secure them.
Tokens are typically digital ‘claims’ on real values, mostly in fragments. This ability to break up physical wholes into digital pieces is called fractionalization. This ability to break up whole values into separate parts that can be owned by others is an absolute game changer, especially since they can be just about anything that has value, and all without the practicality issues of storing and securing the physical asset itself.
This ability to break up whole values is only really possible through digital technology, and requires a slight recalibration in how we think of assets, and of ownership. Now, gold or silver, in single bars or even still in the mine, can be directly owned in digital pieces, and therefore traded or borrowed against, by multiple people. You could even tokenize the deed to that very mine, so that each owner can share in the revenue. Paintings, cars, houses can all be tokenized into digital pieces. Can’t afford a whole house or a whole gold bar? No problem, you can just buy a hundredth (or even less!) of one; this is very easy to do with tokens. And once the value is tokenized, it is then stored in a secure digital safe, not in the sock drawer or under your bed at home.
Wanted: Token Prospector
On its own, then, tokens are an incredibly powerful and versatile digital tool for dealing with wealth in the real world. However, these tokens don’t just appear by themselves. It takes a person, the issuer, who owns the whole value outright and can offer it for sale in the form of tokens. This tokenization process is not very widespread yet, and often owners of such values don’t even realize that it is possible. As they say, knowledge is power. How will they find out? And what things even make sense to tokenize?
The demand for secure, real assets will trigger a true “gold rush” in the not so distant future, just as it has in every past period of economic uncertainty. And just like the prospectors in the Wild West searching the mountains for hidden gold mines, “token prospectors” in the near future will seek out hard values that are suitable for tokenizing and help their current owners understand the untapped wealth they are sitting on.
Tokenization, and particularly fractionalization, is the tool that fulfills the real promise of distributed finance, opening up new opportunities for ownership, wealth, and financial stability through peer-to-peer barter. The technology is ready — all that’s missing are people who can go into the world and identify the tokenizable assets that make the most sense, especially for fractionalization.
So, what makes a good Token Prospector in 2021?
- Be smart and resist the FOMO. Be especially wary of DeFi projects. Everything that sounds too good to be true usually is; as they say, there’s no such thing as a free lunch. There are so many scams, pump-and-dump schemes, and dead projects out there that it can sometimes be hard to tell what actually has potential.
- Make investment decisions based on facts rather than hype, hot air, and “potential.” The blockchain space is full of this stuff, so stick to tried and true business cases and asset classes with an actual history you can look at.
- Remember that blockchain is not a magical band-aid that will fix everything. Like any technology, it has limitations. Think about apps; everything these days has an app (or two!), but sometimes that just makes everything more complicated. It’s the same with blockchain; the technology, by its very nature, has specific use cases it is perfect for, and others that it just isn’t. So, implement tokenization for its strengths, not just because it is a fancy new technology. It should fit naturally into the business case, rather than having a business case that must be massaged and warped around blockchain’s limitations….
- Do your research and work with trusted partners. One of the upsides of such a young and volatile space is that the companies and people who have survived this far are usually doing something right. So seek out established companies that don’t promise free money, but believe in blockchain and tokenization as forces for good.
The token prospector as a new profession? Maybe in 2021.
CoreLedger’s mission is to make blockchain adoption as easy and affordable as possible. With our Active Sandbox and white label suite you can build a custom token economy solution without writing a single line of code; or, unlock unprecedented tokenization and trading options with our patent-pending TokenWARP technology. Click here for more information, or get right in touch with us.