With the world gripped in a pandemic and national economies struggling, inflation may not have been a major concern in recent months. Yet the decidedly bullish mood stock markets have shown following a slump in spring could be an indication that prices of assets, goods and services are poised to head skyward. In some cases, price increases are already upon the consumers.
If the world is facing a post-pandemic resurgence of inflation, investment in scarce assets may be a wise hedge. Yet the majority of assets such as real estate, rare artworks or precious metal depots are typically accessible to major investors only. A relatively new digital asset class is opening up new options; tokenisation, the issuance of blockchain-based shares of ownership, allows an investor to easily optimise and diversify a portfolio with fractional ownership of many different scarce real assets like properties, classic cars, gold or diamonds.
“At this time, tokenised tangible assets are still a very small asset class,”
writes Philipp Sandner of Frankfurt School Blockchain Center (FSBC) in a recent Forbes article.
The owner of the token has a legal claim to a certain asset and can transfer ownership to another party, e.g. a buyer, without much bureaucratic effort. Smart contracts, automated contract components on the blockchain, and the blockchain technology itself, guarantee the integrity of the entire transaction and provide data processing features such as availability, validity and authenticity.
Accordingly, tokenised real assets have received growing attention over the past year, including the launch of multiple security token offerings (STOs). Here we look at some of the most interesting and innovative examples.
Cattle farming in Bolivia
Based in Switzerland, Finka has launched an innovative security token enabling investment in the cattle industry. The Finka Token, released in December 2019, is a revenue-sharing token supported by an underlying liquid asset. Priced at CHF 1.00 per token, the digital asset aims to democratise cattle farming. Investors share annual operating revenues from a highly successful ranch in La Pradera, Bolivia, which is run by the company’s subsidiaries on more than 3,200 hectares of premium grassland. The herd is over 4,300 strong, and its operation has been cash positive for more than 20 years. The ranch is organic, environmentally compatible and compliant with international environment and social governance (ESG) standards.
Sustainable shipping
The Green Ship Token, launched by German-based Vogemann Group in July 2020, allows investors to support and profit from fuel-efficient and low-emissions cargo shipping. The traditional shipping company operates a fleet of vessels termed “handysize bulkers,” a class of ships designed to call at almost any port worldwide, even where infrastructure is limited. Bulkers account for around 30% of global transport of goods by sea, and typically carry essential commodities like cereals, steel products, ore and fertilizers. Newer ships in the Green Dolphin class use approximately 40% less fuel than their older counterparts. Vogemann offers a fixed return of 8% p.a. plus variable participation in profits.
Collectible cars
Inspired by the impressive auction results achieved by limited edition and other very rare exotic cars, the digital asset firm CurioInvest purchases, insures and stores individual vehicles. In July 2020, the Liechtenstein-based company successfully tokenised a legendary Ferrari F12TDF sports car, of which only 799 were manufactured. The CurioInvest Car Token is priced at USD 1.00. Investors receive a cash payout from the sale of the vehicle. CurioInvest has over 500 more ultra-rare luxury and sports cars in its pipeline, including fabled brands like Aston Martin, Bugatti and McLaren.
Real estate
Liechtenstein-based Crowdlitoken specialises in tokenising high-quality real estate objects across Europe. Investors can choose the specific property of which they wish to acquire a share. Recent objects include commercial properties in Switzerland. Crowdlitoken forecasts annual returns of 5–7% with a minimum return of 2.1% p.a., paid out on a monthly basis. Other examples in the field of tokenisation of fixed assets (real estate, cars, art etc), are companies like Finexity & Bloxxter.
The future of tokenised real assets
Despite these advances and the potential they reflect, security token trading is still far from mainstream investment. In a Forbes article cited above, blockchain and digital asset expert Philipp Sandner says that there are currently very few providers of these services. Yet he goes on to predict that “within the next 12 months, several offers of this kind will come onto the market”.
At area2invest, one can already invest into this new asset class. The marketplace offers providers and investors secure access to these assets. In addition, own issuances are supported by possible network effects, cost efficiency and regulatory compliance.
