Tokenization of industrial capital goods

Industrial capital goods (e.g. machines, energy infrastructure) inherit a crucial value to the worlds economy, yet they are suffering from limited financing and investment possibilities. These hurdles could be overcome with an efficient implementation of an Ethereum layer by Amazing Blocks. Machines, commercial vehicles and even cars could then not only operate autonomously but also be integrated in financial services such as leasing or factoring. With Amazing Blocks these tokenized industrial capital goods will be legally in line with the TVTG (Liechtenstein Token Act). This marks a significant step toward a digital token economy changing the way we will invest in the future and ultimately transforming the financial system. — Author: Nicolas Weber

Advantages of tokenization

The financing processes can be morphed into a dynamic “pay-per-use” system, enabling companies to better adjust their costs in line with the actual revenue currently generated. Additionally, tokenized industrial capital goods also enable companies to issue ownership rights for these machines. This will attract an extended network of investors who can actively participate in profits and provide required capital. Small and medium-sized companies as well as private and institutional investors will greatly benefit from this innovation.

Figure 1: IoT connected devices from 2019–2030 (source: Statista)

Why tokenization is needed in this sector

The industry is plagued by an omnipresent lack of liquidity. The reasons for this can be depicted as follows: The investment possibilities are limited and financing options scarce. Often they are infused by high prices and interest rate dependence with many additional costs for the complex and time-consuming process. The result is a lack of flexibility for clients as well as for private and institutional investors. Furthermore, the sale and exchange of said goods is met with complex paperwork and notary infused processes. Expensive high-risk investments further strengthen the argument of a highly illiquid industry paired with friction through intermediaries.

How to tokenize industrial capital goods with Amazing Blocks

First of all, legal hurdles have to be taken out of the equation. Amazing Blocks efficiently leverages the renowned TVTG (Liechtenstein Token Act) enabling the establishment, disposition and administration of digital legal entities (e.g. tokenized ownership rights for machines) in Liechtenstein with EU-validity. On the other hand, Amazing Blocks utilizes Ethereum as a technological layer for its client-oriented holistic software. The result are equity and ownership tokens represented on a blockchain. They consist of a legal part (the articles of association) and a technical part (smart contract). Both are perfectly integrated — tech and law. Initially, a legal entity in Liechtenstein has to be established. Typically, setting up an entity can last up to 4 months. However, thanks to the experience and expertise of Amazing Blocks, the time can be reduced to a minimum thus saving time and money. The entire process can be executed fully remotely.

Future outlook and conclusion

The future holds skyrocketing developments caused by the vast amount of capital inflow from financing and investment access improvements. Newly founded synergies will push this stagnating sector forward to a decentralized, peer-to-peer oriented structure enabling the beforehand mentioned benefits. This is supported by geopolitical agendas of significantly investing in infrastructure and machines like India’s one trillion dollar plan for instance. The resilience of this sector is also shown in the fact that Germany’s industrial production grew at a faster pace in June than expected, despite COVID-19 related trouble. Tokenization will rejuvenate a frozen industry and further propel it toward digital integration.

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Digital legal entities in Liechtenstein based on true equity tokens to tokenize any asset in a standardized way to save time and money. - www.amazingblocks.io