Blockchain works perfectly for the online-distributed assets. For example, you can easily buy and store tickets to your favorite band’s concert. Problems start when you try to link a real-world assets to the token. There are huge debates about this issue: How can we validate the asset? How to ensure all the legal conditions? What happens when the conflict between parties participating in a deal occurs?

The Proof-of-Asset Protocol we develop at BANKEX serves to solve these issues.

To make sure that the asset has a necessary quality it goes through so-called “Smart Asset Caterpillar”. This name was picked when we realized that in order to achieve true value of a Smart Asset, which means proving that it is ensured by an actual asset, it was imperative that smart contracts in the chain were to flow from one to another in an uninterrupted sequence. “Smart Asset Caterpillar” is a series of smart contracts that serve to validate and exchange assets. Information about all these steps is recorded in a blockchain.

To validate the asset we use different methods: from data crawling from open databases and using external oracles to IoT sensors and third-party vendors. Use of these methods depends on the type of the asset. For instance, to tokenize shares of non-public companies we might use only external oracles and third party vendors. However, real estate tokenization will require IoT usage.

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To make the asset globally liquid (like goods on the Amazon) it has to meet all the regulations. That is why we can add necessary smart contracts to the “Smart Asset Caterpillar” depending on the delivery legislation. Is there something to be done and then marked with a tick? Good — we include this condition into the logic of the Smart Asset’s function and mark it with the tick, then the Smart Asset becomes valid and, consequently, gains value.

Sometimes there might be conflicts between parties participating in a deal. Currently, such issues are solved at courts. However, it is a very expensive and long way of solving disputes. Also, usually at a court a winner is not a right party but a party with the best lawyers. Moreover, in many cases people don’t have any contract for their deal so it is impossible for them go the court. All these factors result in a large waste of time.

As a solution of this problem we see creation of a smart asset community. The BANKEX ecosystem also needs such communities for two more important functions — product expertise and providing Proof-of-Asset evidence in the event of Smart Deal disputes. For example, if one side states that an asset delivered is broken and another side says it is not, smart asset community due to their expertise in a product will convict a fair decision. For participation in voting they will get rewards in tokens. Such approach is similar to the self-regulatory organizations (SRO) work.

Taking advantage of blockchain and tokens, BANKEX will make storage and exchange of the real-world assets more efficient.

What changes do you think will happen due to the assets tokenization?

Article is written by BANKEX blockchain analyst, Vladimir Lugansky