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13 ^{Decentralizing Finance}

Cryptocurrencies,

ICOs, STOs and

Tokenization of Assets

Hazik Mohamed

13.1  INTRODUCTION: BACKGROUND AND DRIVERS

There are several key drivers that are making decentralized finance work ‒

tokenization of real-world assets, maturity of stable coins, and the improved accep­

tance of regulations and standardization. We are witnessing two fast-growing trends

merge and complement each other. The first one is tokenization, where all illiquid

assets in the world, from private equity to real estate and luxury goods, become

liquid, and all liquid assets can be traded more efficiently. The second is the rise

of a new tokenized economy where inevitably, new rules will develop, categorized

as tokenomics. The new economy is enabled by solving the volatility in cryptocur­

rencies with the introduction of stablecoins (Mohamed, 2020b). By unlocking the

economic potential of blockchain, these two complementary and correlated trends

CONTENTS

13.1 Introduction: Background and Drivers........................................................ 221

13.2 Conceptual Framework................................................................................222

13.3 Money, Fiat Currency and Cryptocurrencies...............................................223

13.4 From ICOs to STOs.....................................................................................225

13.5 Tokenization of Assets of Value...................................................................226

13.6 The Tokenized Capital Markets and Debt Markets.....................................227

13.7 Example: Unlocking Value in Agriculture and Livestock...........................229

13.8 Benefits of Tokenization on Securities Management and Traceability........230

13.9 Self-governance, Self-regulation and Cybersecurity................................... 231

13.10 Conclusion....................................................................................................232

13.10.1 Limitations of Research..................................................................233

13.10.2 Recommendations for Future Research..........................................233

Notes����������������������������������������������������������������������������������������������������������������������233

References...............................................................................................................233

DOI:  10.1201/9781003138082-13