The world’s financial markets are set for significant innovation within the coming years as blockchain allows for the digital transformation of smart contracts, says James Belding. Co-Founder and CEO at Tokenized.
A smart contract utilises a software agent to interpret and enforce certain terms and conditions, as well as automate administrative tasks such as managing transfer requests and updating ownership registries, as well as enforcing rights and managing governance proceedings. This approach results in significant efficiency gains, and a better user experience, across the lifecycle of the contract.
Speaking at the recent Blockchain in Business Conference held in Sydney, Belding said that the value proposition offered by smart contracts forms part of a wider plan to provide commercial recordkeeping to companies on the blockchain. Tokenized is an award-winning all-in-one tokenisation solution for institutions, government agencies, enterprises, and individuals.
Private markets are bursting with tokenisation use cases
Belding sees the biggest opportunity for innovation within the private market sector, which has seen significant growth compared to public markets in recent years. Despite this significant growth, Belding noted that contracts in private markets are typically not digitised, with many still relying on physical paper copies. They are also not standardised, leading to significant delays and time-wasting.
‘The entire process is very complicated from the review and drafting perspective, but also down the line as these contracts and instruments need to be serviced over time,’ he said.
While some companies offer software solutions to address these problems, he noted that these are typically piecemeal and not full-service. ‘The real problem in our view is that contracts are not digital – software can’t make sense of it and the key facts and figures are not extractable by computers.’
A smart contracting platform
Tokenized aims to address this through its smart contracting platform that utilises blockchain technology to vastly improve record keeping in financial markets, with the BSV blockchain used as a base layer for all recordkeeping. This includes:
- Contracts that are human and machine-readable;
- Automated contract performance:
- All activity is digitally mediated through the blockchain.
‘We can offer true automation across the board. So the moment you sign a contract everything downstream of it – the records and registries – get updated and they are 100% right,’ Belding said.
‘It is (also) an immutable timestamp ledger to which we record all of those changes and records so that anyone can audit it at any time. By having this single source of truth for all of these key records that are on-chain, you can eliminate an entire class of fraud from the equation – multiple sets of books as popularised by Bernie Madoff.’
One token platform to rule them all
Another significant benefit of the Tokenized platform is that it consolidates many of the tools and workflows used by companies today under a single umbrella, Belding said. He noted that governments, businesses and legal firms all still prepare contracts with Microsoft Word, Excel Spreadsheets and a handful of other software programmes.
Tokenized consolidates these programmes into a single platform where every piece of data has a single source of truth, Belding said. Some of the other benefits offered by Tokenized include:
- A desktop and mobile app;
- A ‘no-code’ smart contract engine;
- The ability to have a fully legal agreement encoded into a smart contract;
- Atomic swaps: Allowing for near-perfect P2P trades.
