It has now been 10 years since the Bitcoin whitepaper has been released.A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution — Satoshi Nakamoto, Bitcoin Whitepaper.
While Initial Coin Offerings may have tarnished the “utility” label to many as a means to skirt regulation, utility tokens do truly exist. The original utility token, Bitcoin, was created with the purpose of incentivizing security and providing access to the Bitcoin Network. The network itself could not function without the role that the token plays in the system’s architecture. Its value is determined by an open market demand of the token.
With tokens, we now have the ability to send value anywhere in the world with the simplest smartphone and an internet connection, all done without the legacy financial system acting as a middleman facilitating transactions. This is value in the form of bits of code being transferred. What these bits of code represent are up to the users and the system they exist upon. What we will begin to see are traditional securities removing middleman exchanges by entering the blockchain ecosystem. The ownership to an underlying asset will be linked, by law, to a digital token on a network. Stocks, bonds, and investment contracts are being legally tethered to lines of code and provide financial rights to the owner, e.g. voting rights, profit share rights, redemption rights, equity, and dividends.
Think of traditional assets similar to that of mailed physical letters and tokenized assets to that of emails. Bitcoin first brought us programmable money and with that we are now discovering the power of programmable securities.
The global financial system has improved immensely because of the digital age. Relative to pre-internet days, there is no reliance on anything physical in the process but they still can only streamline the process...