Asset tokenization requires a worldwide public blockchain for registration.

According to the Boston Consulting Group (BCG), the tokenization of global illiquid asset represents a $16 trillion business opportunity by 2030, with tokenized financial assets, such as patents, accounting for $3 trillion of that opportunity.

With the tokenization of assets, great opportunities await, and IPwe leads the way in intellectual property.

Offering a different, perhaps even opposing viewpoint:

The most fundamental aspect of tokenization is the addition of physicality to digital objects.

Because of this, every blockchain with an element of immutability and decentralization generates some level of physicality.

However, not all blockchains are created equal. Not everyone will be able to generate the necessary physicality. Digital physicality will be measured not only computationally, but also socially, legally, and economically. And the level of physicality required will rise in lockstep with the level of adoption until most blockchains are rendered obsolete or pushed to upper layers to overlay networks.

In order for an asset to be represented by “a set of bytes” and gain effective physicality, the underlying blockchain must at the very least:

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1. be UTXO-based (rather than account-based);

2. employs anti-corruption Proof-of-Work consensus;

3. has unbounded scalability (it doesn’t matter if a specific application has no demand for high TPS because everything will converge, and scalability will have to be measured globally and across all industries);

4. is compatible with IPv6 at the New Internet’s base layer;

5. achieves universality in the end (by becoming the globally recognized Single Source of Truth to ensure the reliability and trustworthiness of asset registrations).

The preceding #5 may not be obvious, but it is unavoidable. We are not playing computer games when it comes to asset tokenization. The tokenization solution must provide a clear reality on which people everywhere can rely.

Consider traditional assets such as houses and cars that are registered with a local government. Will the registration system function if multiple registrations represent different and competing sources and authorities? Obviously not.

Furthermore, even if there is only one official registration, if property transactions can take place without registration and be accepted and honored with confidence by private parties, the entire system will fail. Private sales of houses and cars without registration do occur in current systems, but only very rarely, and when they do occur, it is usually by accident, not on purpose. Even with such a low occurrence, a comprehensive legal framework governing regulation, title, and ownership must be in place to govern property transfers.

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The Single Source of Truth is unquestionably the most important feature of a public property registration system.

Because it represents a Single Source of Truth, a local property registration system works. And the only reason it can be local rather than global is that these assets are physically localized.

However, once assets are tokenized and moved to a public blockchain, your ‘local’ become ‘global’ by definition. Multiple registrations on different blockchains for global assets will not work, just as multiple registrations for local assets will not work.

This is the fundamental issue of ‘ledger universality,’ which is the current digital accounting system’s biggest weakness. The failure of the FTX digital currency exchange, followed by the nearly futile “Proof of Reserves” attempt by other virtual asset exchanges, highlights this issue. It is because, in the absence of a universal ledger, it is possible to prove ‘what is’ but not ‘what is not.’

Ultimately, the selection of the appropriate blockchain will be critical. It doesn’t seem to matter much right now because everything is still in the experimental stage.

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