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Everything can be tokenized, but not everything is worth it

Tudo pode ser tokenizado, mas nem tudo vale a pena

Everything can be tokenized, but not everything is worth it

In March 2021, it caused a stir when it bought a piece of digital art — Everydays: The First 5000 Days — at a Christie’s auction for a staggering $69.3 million. In December, the sum was surpassed by another work: Merge, which was sold for US$ 91.8 million (R$ 512.2 million, approximately).

Both works are NFTs (Non-Fungible Tokens), a digital property certificate that cannot be replaced, divided or shared, created on a blockchain , a system of record based on pieces of code with connected information.

The multimillion-dollar transactions drew worldwide attention to tokens as investment options. But what few people know is that the use of tokens goes far beyond works of art.

The technology allows any real asset to be digitized and transacted, from a property or a share to music copyrights, for example.

According to consultancy area2invest, this market is expected to reach a capitalization of US$ 3 trillion in 2025.

While investors are studying the different types of tokens – in addition to NFTs, there are utility tokens and security tokens -, entrepreneurs in the digital world are opening new fronts in this market to offer profitable and safe options.

Among the pioneers of tokenization in Brazil is Cássio Krupinsk, CEO of BLOCKBR , a serial entrepreneur who sees this market as the future of the investment industry and a cheaper and more efficient alternative for companies to raise funds.

In this exclusive interview with SpaceMoney , Cássio explains the stage and challenges for business tokenization, in addition to providing guidance on the precautions to be taken when investing in digital assets. Check out:

After the recent popularization of cryptocurrencies, what does tokenization represent for the consolidation of blockchain in the financial market?

Tokenization makes the market more serious. That is, tokenization brings the possibility of making a physical asset, through a digital representation, the tokens, something more solid.

And it brings numerous benefits that are already changing the entire market. Obviously we are still at the beginning, because there are very few professionals and companies doing this in the world. But it is a path of no return.

What can be tokenized?

Everything can be tokenized , but not everything is worth tokenizing. Today, if you have an asset that generates wealth, that has collateral, it can be tokenized.

If I’m going to talk about some niches, mining, real estate, energy, receivables and everything that is a financial product can be tokenized. Tokenization takes away the need for so many intermediaries.

You do not need to create a CRI or a CRA to make investments in real estate or agribusiness. I do this through a token much more efficiently, benefiting both the asset owner and the investor.

If I simply tokenize a receivable, I am taking it from the intermediaries, making the investor make a greater profit and benefiting the asset owner. Giving much greater efficiency, and with warranty.

If I tokenize the anticipation of rents, for example, I can have a property pledged at the same value as the advance. So everything can be tokenized, but not everything is worth it.

If it is possible to tokenize virtually any asset, does that mean that the tokenization market could still be much bigger than the cryptocurrency market today, which is just one type of digital asset?

It will certainly be, and it will also be much bigger than the stock market. On the stock exchange, the results are not so clear and easy to understand for novice investors or even curious investors who no longer believe in the traditional domestic market.

Companies pay a lot to be on the stock exchange or have their own fund. And in tokenization the price is very low. It is decentralized and democratized. So, the tokenization universe represents at least 10 times more than the exchange.

What stage is the tokenization market at today?

Tokenization is still at the beginning of the beginning, because of the regulatory aspect. Because technology is being much faster than any regulation.

So, when talking about cryptocurrency regulation, for example, people look at centralized exchanges, but today there are decentralized exchanges and, apart from that, there are DApps, which are applications where you create your own community and transact within a single group.

How are you going to regulate a market where technology is so far ahead? In Switzerland, for example, what is behind the asset is observed and not so much how it will be distributed, such as security tokens, which have guarantees and backers.

It is a process that needs approval for the issuance of tokens. It’s like you have to ask for the blessing.

In Brazil, we cannot take what is happening abroad as a basis, as our rules are different. But the path is only one, and the first step has already been taken, which is the digital real, taking as a guarantee the control of peers, either cryptocurrencies or tokens.

What are the types of tokens?

The first tokens suggest themselves as fan tokens , giving benefits to a fan or fan member of a football club, for example. From choosing the music that will play before the game, blowing the first whistle of the match, to benefits within the club.

The second movement of tokenization was utility tokens, in which you transform tokens into financial products, but that do not require guarantees and ballast — and this is where the risk is in the same proportion as the offer. And they can be changed from the beginning of their offer, in the primary market, until they reach the secondary market.

And the third movement refers to security tokens, which have guarantees and backing. We at BLOCKBR are working hard to accelerate the consolidation of security tokens in the market.

How is the token market regulated today?

By blockchain and by the smart contract itself. Before a tokenization offer, it is necessary to make it clear, and demonstrate through the white paper, how the entire operation will be, what will be delivered, with all the rules and benefits for the participants.

Tokenomics is also created, which refers to the distribution of tokens and their economy. The smart contract governs operations within the blockchain and deliveries are made by the asset owner to investors in the highest security and efficiency of the blockchain.

What if the token issuer doesn't deliver?

What if the token issuer doesn’t deliver?

The operation is stopped and responsibility is assumed by the owner of the asset, who is primarily responsible. The problem is when tokenizers appear that guarantee absolutely nothing, as this will complicate the market.

Therefore, it is good to pay attention to the specifications of the token rules and what is behind it.

Speaking of tokens that are not always financial, as is the case with a fan token, for example, a football club is responsible in the same way that an airline, which created a frequent flyer program, is responsible for rules and miles .

A lot of people are still afraid to invest in tokens and other cryptoassets. Is it riskier to invest in a token than a stock, for example? What precautions should investors take to invest in tokens?

The stock goes up on rumor and down on facts. I believe there are millions of people who regret not investing in Bitcoin. When they see Bitcoin falling, they put a smile on their face, but they still don’t understand what’s behind Bitcoin and that scarcity is the big deal of this asset. You have to invest.

Anyone who does not invest in cryptocurrency will have a very big and painful regret in the coming months and years. I compare blockchain, its solutions, and its investments with the adoption of smartphones — many people resisted buying one, but today, people solve almost everything through their cell phone.

The internet appeared in 1994 with Netscape, in 2004 social networks appeared, with Orkut and Facebook, changing human behavior. And blockchain comes as a solution to change the entire market, worldwide and in all sectors.

So investing in digital assets is a path of no return. I even remember some images I saw these days of large traditional companies in 1934 that said about computers “this won’t work, a machine does a human job?!” and many years later the same happened with smartphones. It’s cyclical.

Human beings tend to deny and assimilate the past into technologies and changes for the future. The summary of this for today is that whoever is outside will enter. You have to be careful with the big bubbles. In 1995, at the beginning of the internet, there was a big bubble. And, as in every bubble, 95% of opportunities are subject to scams.

So, when buying a cryptocurrency or other digital asset, it is enough to know where you are putting the money, understand what is behind it, which company, what that asset means, in which niche it operates.

You have to follow and understand who the CEO is, everything he posts and writes about the market and what his relationship of trust and transparency is between doing and speaking.

Understanding the business vision, the market vision of each founder and who is at the forefront of the business is essential these days, when children are creating cryptocurrencies within decentralized exchanges and billionaire bucks through memes.

In terms of regulation, what are the main concerns?

The main regulatory concern for crypto assets today is how to fight financial pyramids. This is the first point, it is already being discussed, and soon there are pillars for the solution.

I believe that the solidity of a company or asset and the “smoke” of others who want to be deceived are becoming increasingly clear to the market.

What will help this process this year is the digital real, which should come between June and August. With this, the Central Bank begins to have more control over withdrawals and transfers and what comes out of exchanges.

The second point is to understand some niches that are being tokenized, the biggest one being the real estate sector, which is the biggest today in the world and the most misunderstood for tokenization.

The types of tokens that are currently available in this sector in Brazil do not provide any guarantees; most are utility tokens that are offered as: “look, invest here in this token and you will get a return x ”. But what guarantees this return? An operation Y that we still don’t quite know how to operate?

the market for tokenization cannot be diverted to more of the same of the traditional… tokenization allows creativity with many guarantees, but this will come in a different flow, from the speculative one too, but with a greater vein of transparency, having access to the documents of the transaction of offer, whitepaper governing the rule in blockchainand this will create a very different market culture, accelerating the process of investing in tokens, as is already happening.

Especially because it pays more, has fewer intermediaries and provides solutions for the asset owner, regardless of the niche.

Will tokenization contribute to the democratization of investments?

Certainly. Why don’t ninety-five percent of people invest in mutual funds? Because it’s horrible to explain what a CDB with 200% of the CDI is. What is it? A debenture, CRI, CRA, CCI, ETF…

To invest in stocks, there is a minimum amount to be applied. And the exchange is open from Monday to Friday, it closes at six in the afternoon. So, the digital asset market, as a whole, is democratized because it is very easy to explain to investors that they can invest in cattle with 25 reais, buying a token that represents this asset.

The market doesn’t stop, it’s twenty-four for seven. In other words, it is a much larger market than the traditional one, there is much more money on the table, and the potential investor is in the traditional “mincemeat”, who has 25, 50, 500, 1,000 reais to invest.

In other words, digital assets allow us to generate wealth. When we talk about token offering we talk about different assets.

Today there are individual profiles with a ticket from 500 to 50 thousand reais to invest in tokens, there are institutional investors who invest in tokens at a pre-fixed rate of two percent per month, for example.

It is a wonderful bridge to foreign capital because Brazil has excellent operations running.

How should tokenization advance in Brazil in 2022?

I believe that 2022 will be a decisive year, in terms of the entry of the digital real and the consolidation of tokens and cryptocurrencies. The great challenge of the market is to foster the culture of tokenization, both investments in tokens and financial education on tokenization.

That is, owners of companies that own assets, wanting to enter the universe of tokenization, tokenizing their assets, interested in tokenizing their businesses, understanding the modalities and factors that are extremely important to provide security to investors, because, in the end, the tokenization has to benefit the asset owner.

Finally, the magic of Bitcoin mathematics through blockchain caused such an incredible legacy. Being able to benefit the investor of a token, in the best decentralized and democratic way possible, and the owner of the asset, with the greatest efficiency in capturing at minimum rates… .

Source: SpaceMoney

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