What do you value most in the world? It’s a question that many of us are asked and the truth is, it probably changes from day to day and week to week.
By Jillian Godsill and Neil Pennington
Challenges in Valuation of Digital Assets
With today’s risks from climate change, pandemics, and state control our priorities and values are likely shifting towards personal freedom of choice and spending time with people we know and love. As a society we are rethinking our approach to work and leisure and, as a result, placing more value on our free time; on experiences and the luxuries we can find in this troubled and uncertain world in which we live.
Such “Luxury” value is hugely subjective: one person’s Rolls Royce previously owned by John Lennon is another person’s Vintage Gibson Les Paul Guitar played by Jimmy Page; one person’s Van Gogh is another person’s digital art produced by the artist known as Beeple.
In all this, it is a truth that there is value in ownership, and in today’s world of deep fakes and “alternative facts”, having certainty that what you own is true and authentic is of utmost importance: this is “Proof of Ownership”.
It has always been hard to verify whether or not the asset you own, or are considering buying, is a highly valuable original, or a less valuable copy. More often than not, the more valuable, and rare the asset, the harder it becomes – often involving experts and complex trails of documentation.
Highly valuable digital assets are not immune to this problem. While “history” is less of an issue, proving that a collectible video clip, sound recording, iconic photograph or piece of digital art is the original, especially when millions of copies are available across the internet to download and copy/print is a serious problem.
NFTs Can Be A Solution
Blockchain offers the solution, through the use of the NFT (“Non-Fungible Token”). NFTs have been around for a while, but they are gaining traction (as seen through recent high-profile events such as the Beeple auction for a piece of digital art that sold for $69m, the first tweet by Jack Dorsey, and many other high value celebrity collectibles). Putting the hype aside, the NFT brings some serious functionality to the problem of digital provenance. Unlike the more familiar fungible token associated with cryptocurrencies, the NFT shares similar characteristics to a physical asset: it is unique, rare and indivisible – a permanent unalterable record that describes exactly what it represents and the rights associated with it.
The programmable nature of the NFT also helps share value in different ways, through the ability to track change of ownership and create business models where royalties can be paid to the original artist.
Digital Transformation in Luxury Industry
The challenge of security, provenance and the distribution of value is not only limited to purely digital assets. Securing, protecting and growing the value of the things we own is also critical when dealing with high value luxury assets in a global market. Blockchain and tokenisation is playing its part in the global luxury market and leading the way is a company called Idoneus along with their payment token, the IDON.
Idoneus has leveraged the technology to transform the business of luxury. The identity verification and smart contracts they have built on blockchain ensure the legitimacy of a transaction while providing security and lowering the costs that typically impact transactions in the luxury space. Rather than “cash”, they are shifting the emphasis to “value” using cryptocurrency (in this case the native payment token IDON) as a secure medium of value exchange. One of the great things about Idoneus is that, they have taken regulation very seriously from day one – ensuring compliance with requirements such as KYC and AML; people really do value what they own and Idoneus values the confidence that people place in them to help manage the risk they face with the things they value in their lives.