The rise of non-fungible tokens (NFTs) largely coincided with that of digital art. The process of tokenization allowed artists to create the art they wanted (IE, noncommissioned work) and sell it to the highest bidder. Tokenized digital art grabbed headlines in early 2021 when Grimes sold about $6 million worth of NFTs and the rock band Kings of Leon sold their album exclusively as NFTs. Since then, NFTs have been the source of both admiration and derision, but the applications for NFTs and tokenization have grown rapidly in a short amount of time. Let’s take a closer look at these applications and how organizations in many sectors can benefit from this technology.
What is Tokenization?
Tokenization is the process of turning a piece of data into a random string of characters. Since the token itself contains no meaningful data, it’s only a substitute for the actual data. In other words, it converts useful data into something that’s only usable on a blockchain application. When a token is non-fungible, this essentially means that the tokens are differentiated from each other, and so they cannot be exchanged like-for-like the way a $20 bill can be exchanged for another $20 bill; they also cannot be divided into two or more parts the way one $20 bill can be exchanged for two $10 bills.
There are many applications for tokenization and NFTs beyond digital art and we’re excited to provide the framework for governments, manufacturers, and more. Here are a few examples of SIMBA Chain’s work:
Vehicle Registration Data
The State of California is proving to be one of the forward-thinking governments that are implementing blockchain technology into its processes, including the Department of Motor Vehicles (DMV). Among these ambitions were to create virtual wallets for identification, build a blockchain platform for tracking vehicles’ lifecycles, and create a secure architecture for driver records.
There are many benefits that come with implementing blockchain and tokenization to a service like the DMV, this includes:
- Keeping vehicle information updated and consistent
- Reduce cost and time associated with vehicle transfers
- More complete vehicle ownership history
- Synchronized records
- Robust security and transparency
- Accelerating DMV services
One thing we know is that blockchain and manufacturing are an unlikely, yet perfect, match. Manufacturers rely on the principles of trust, security, automation, and resilience—four qualities blockchain delivers in spades. A titan of the aerospace industry is Boeing, who have started using blockchain and tokenization technologies to streamline their tracking and production systems.
Building an airplane requires the use of thousands and even millions of parts which all must fit together into a single cohesive system. One of the ways this can be ensured is through tokenization; two of the distinct possibilities for blockchain to prove its worth:
1. Tracking the Provenance of Components
Aircraft manufacturers can use blockchain and its related technologies to track the provenance of components, which past technologies struggled to do simply because of the vast number of parts produced and the number of suppliers who produce them. The use of blockchain allows manufacturers to prove the origin of their parts and verify that their parts meet the needed specifications.
2. Configuration Management
Another use for blockchain within aerospace manufacturing is the immutable ledger it brings with it. The ledger provides a record of all components and embedded software to manage the appropriate certificates of performance. This provides transparency into aircraft configurations and recognition of conflicting certificates. Honeywell, for example, provides a blockchain-backed online marketplace to ensure parts are accurately documented.
One industry finding itself in a moment of transition is real estate. The emergence of crypto transactions and the use of smart contracts in the homebuying process have also raised interest in using tokenization and NFTs in real estate.
A piece of property can be tokenized and sold as an NFT. There are many benefits associated with completing a real estate transaction through NFTs, but chief among them is the traditional method requires a lot of hassle and paperwork, but when an NFT is used, the process is streamlined, and the buyer can assume ownership of the property in a matter of minutes rather than hours or days.
Additionally, tokenized real estate allows for flexibility in how the transaction is completed. There are two types: entire asset (EA) and fractional ownership (FO). An EA token allows the buyer to purchase the entire property as long as the actual property deed itself is turned into an NFT; this happened in February 2022 in Florida, where a home was sold as an NFT for the equivalent of $650,000 in Ether—believed to be a first for crypto and real estate transactions. A fractional ownership transaction allows the property to be divided up and sold to multiple investors.
Tokenization can be used for mission critical communications to ensure confidentiality.
Government/Mission Critical Communications
Today’s military operations are complex, so to successfully plan and execute them requires timely, accurate, trusted, and unambiguous communications across the chain of command and across different nations’ Air Forces, Armies, Navies, and cybersecurity forces. The use of blockchain in these communications may facilitate acceleration of these multi-domain command and control operations, providing assured, cross-domain identities and policy-compliant information sharing for the target planning process.
Blockchain, in conjunction with verifiable credentials, can provide trust across processes and participants. Specifically, the blockchain solution has three crucial components:
1. Unclassified multi-domain targeting
A private, permissioned, unclassified targeting consortium blockchain application spanning security domains provides a trusted common operational picture (COP) for the targets and situational awareness (SA) of the targeting process itself. Proposed changes to a target must be endorsed and distributed using this targeted blockchain network.
2. Classified verifiable credentials and unclassified verifiable presentations
Through the use of blockchain, classified targeted information is assuredly and selectively shared through digitally signed credentials issued to each target entity’s digital identity. Verifiable credentials provide the basis for generating verifiable presentations and zero-knowledge proofs (ZKP) to selectively share classified information only within secure domains.
3. Unclassified multi-domain self-sovereign identity network
A permissioned, public, unclassified blockchain identity network spans all participating domains and provides unclassified trusted digital identities and public key enablement (PKE) for all participating entities (whether they be a person or non-person) including target entities. Using blockchain-enabled self-sovereign identity (SSI).
SIMBA Chain specializes in blockchain disruption. We’re using smart contracts and tokenization to help our customers in widespread industries from governments to academic institutions and manufacturers accelerate and secure their processes. The truth is that there are still many more applications for blockchain to realize its potential! SIMBA’s team will help you identify and integrate the benefits of tokenization technology. Contact us today!