Digitization is driving new forms of what we have traditionally called money. Beyond cryptocurrencies and digital versions of established units, there is the monetization and developing concepts around the “tokenization” of assets, which according to one Australian entrepreneur Yousef Hosseini is the next wave of disruption.
A computer engineer and solutions architect who has worked with Accenture, PwC and Deloitte, Hosseini and his colleagues are in the process of launching a platform which is not only an exchange for cryptocurrencies but a way to effectively securitize the value of intellectual property (IP) through digitization.
Called the New York Digital Asset Exchange (NYDAX) the project will launch as a cryptocurrency exchange and then quickly move to the model of tokenizing IP, such as technology research, and offer this to investors both as a way of funding research and also giving investors fresh opportunities.
Deconstructing the Promise
NYDAX aims to be in the next generation of exchanges, trading digital assets as opposed to listed equities and derivatives.
“We want to combine a crowdfunding approach with the issuing of tokens to really democratize research and create a new liquid market,” said Hosseini.
Let us say a research team somewhere in the world is working on a new quantum computing innovation.
The issued digital tokens are “listed” on NYDAX, where they can be bought by investors. These investments fund the research at an early stage, reaching out across borders and dispensing with the compliance costs of many existing investments. Instead, the investment is made available in one universal token, ownership of which is also immediately transferrable through a blockchain.
“If things go well, the value will grow, if not the value of the tokens will die over time,” said Hosseini.
The tokens need not represent a traditional share in a project. They may be tied to a percentage of revenue or profit.
The advantage of this, said Hosseini, is to bring potentially big ideas and expose them to a larger market.
Also, he likes the idea of individuals having an influence on which research gets funded, rather than corporates or governments which have an interest, for example, in military technology.
“Right now, people can’t invest in patents, it is just too difficult,” he said.
“Tokenization of IP is a way to create an accessible and liquid market. If you bring innovation into this space and tokenize it through technology using a crowdfunding system, then this provides liquidity for a small startup.”
Channeling Money Right
One early example of this model is the November 2018 announcement of a deal between BLOCKLOAN, a company offering a “next generation Blockchain wallet” and Hosseini’s company Innovation Network, which is behind NYDAX.
BLOCKLOAN aims to deliver access to funding by creating a global blockchain.
Tokenizing BLOCKLOAN would enable lenders and borrowers to interact on a common blockchain platform independent of currency markets and cross border compliance regulation.
NYDAX is also working on listing tokens which will represent an interest in fractional ownership of assets like residential and commercial property.
People will be able (subject to license and approvals) to invest as little as USD 1 in listed and tokenized properties on NYDAX.
“I think this has the potential to change the game of where money wants to go,” said Hosseini.