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Blockchain Technology

An innovative investment platform can be built to provide access to capital for

these farming households from urban white-collar workers who are looking for

a better investment platform. Livestock can be viewed as valuable assets that can

be tokenized to unlock capital to fund production, land, labour and other critical

resources required to ensure effective farming output (see Figure 13.7). However,

livestock presents an unconventional form of collateral for financing. As such, spe­

cial provisions need to be in place before investors may want to risk their invest­

ments. Among those provisions are the health tracking and ability to insure these

mortal and roaming assets (livestock and farm animals) to ensure the successful

production cycle for both the farmers and urban investors. With the auditability and

traceability of the tokenized (blockchained) system involving mobile phone apps,

embedded wireless sensors on the livestock, and an online platform that monitors the

progress of each batch cycle, value can be distributed directly to investors who wish

to support the production of meat, poultry and other forms of agriculture for small

farms. Such traceability to monitor and audit makes insurance coverage possible for

these unique assets, which will greatly help in mitigating risks in an unfortunate

event that affects the livestock, to circumvent the loss of income for the farmers.

13.8  BENEFITS OF TOKENIZATION ON SECURITIES

MANAGEMENT AND TRACEABILITY

One of the most obvious benefits of tokenization is that it will enable liquidity for

illiquid assets. The short-lived run of mortgage-backed securities (MBS) was an

example of illiquid asset securitization, but its deceptive ambiguity was unravelled

when we understood how they were packaged. The consequences of the deceptively

securitized MBS resulted from components of the financial product that were not

investment-grade (mixed with investment-grade assets), which began to deteriorate,

FIGURE 13.7  Tokenizing agriculture and livestock for capital investment. (Author’s own.)