Are your assets fit for the digital age?
The digitisation of goods and assets will be a once-in-a-generation evolution in finance with transformational impacts, but first companies must overcome challenges of interoperability, Quant Founder & CEO Gilbert Verdian tells The Sunday Times’ Future of Fintech report.
For most people who are aware of blockchain, it is viewed as the technology behind bitcoin, just one of many digital currencies traded by consumers, and increasingly, as an asset class finding its way into fund manager portfolios. Or, perhaps they know about NFTs, the digital pieces of art which are commanding price tags in the millions.
Though blockchain is a complex technology, the premise is simple: fusing the real and virtual worlds to create digital assets, or tokens, through a process of tokenisation. And while cryptocurrencies and NFTs steal most of the headlines, innovative companies are quietly utilising tokenisation to reimagine finance as we know it.
“What we’re seeing today is the result of the push 30 years ago into electronic finance and payments. Now we’re moving into the next generation, which is digital,” says Gilbert Verdian, CEO and founder of Quant, which unlocks the power of blockchain through interoperable ecosystems and real-world solutions. “Tokenisation allows us to embed logic, controls and programmability in how we transact between parties for the first time.”
“Finance is traditionally very binary, one to one. But the digitisation of assets and money, such as with regulated stablecoins or a central bank digital currency, will let us automate complex checks and balances on the buyer end and receiver end. With this new technology, we can become more operationally efficient and creative with how we transact with money. In short, we will be able to do things that we’ve never been able to do before.”
The potential applications are vast, but the common thread is enhanced trust and auditability gained from seamlessly tracing the entire history and provenance of assets and goods, thereby removing intermediaries. Car buyers, for example, will instantly know about previous owners and where components came from. They can assure that parts and components are legitimate, know the vehicle’s history, accidents and repairs for insurance purposes, and if it was manufactured sustainably. House buyers can get into their homes quicker as blockchain records make months of conveyancing unnecessary. Ownership history, events and searches will be available on the blockchain, and payment and final settlement eased with smart contracts.
By powering end-to-end visibility of trade, digital twins: a unique blockchain-based token linked to a real-world physical object or identity, could optimise global supply chains to prevent the costly disruptions as experienced during the Covid pandemic. Crucially, consumers could finally get full control of their privacy and identity in the digital age, controlling exactly who can see their data and how they can use it.
“We’ve all made the mistake of giving up our privacy by trusting companies to protect it securely, but they’ve failed consumers and the market because of the cybersecurity sector’s struggles to secure our data,” says Verdian.
“Digital assets will give control back to the consumer. Tokenisation will also enable us to protect intellectual property for the first time, ‘wrapping’ it as a digital asset and deciding who can consume, rent, transfer, sell or access an asset or good.”
The opportunities that tokenisation presents are undoubtedly exciting, but there is one major barrier standing in the way: interoperability. When digital assets are created, they can typically only be used on a single system or network, severely limiting their capability in our global marketplace. This is akin to buying a mobile phone with a Vodafone SIM and then only being able to call other people on the Vodafone network. It’s a huge barrier preventing the true power of blockchain from being unleashed.
As the world’s first provider of true universal interoperability, Quant is accelerating a new generation of finance, by radically simplifying the adoption of blockchain and the process of tokenisation for developers and financial institutions. The company’s innovation unlocks the capability for digital assets to roam across all networks.
“Our interoperability effectively allows money, assets and transactions to roam in the same way that your mobile phone roams,” says Verdian. “It’s about giving companies and consumers choice how digital assets are created or where they can be transacted. We’re at the beginning of this transformation. Most big financial services institutions have a two-to-three-year strategy to digitise every type of instrument, asset, stock and security they have to benefit from tokenisation and access to markets and clients.”The opportunities are clear, the momentum is growing, and the driver is obvious: savvy investors the world over are increasingly demanding that their wealth managers tokenise assets in their portfolio into new digital assets to gain access to new markets and liquidity. The impact on finance will be transformational.
For more perspectives on the future of finance, visit Quant's website.