Disclosure: The views and opinions expressed here are solely those of the author and do not represent the views and opinions of crypto.news editorial.
Ask anyone or take a look at any Twitter poll, and you'll find that “real-world assets” are catalysts for the next bull market. While I agree with this sentiment, we must keep one thing in mind. Assets, as we have known them, have very little utility other than speculation, and to achieve mass appeal we have to go beyond speculation to create actual utility.
Improving facilities leads to user adoption; As people experience the benefits of tokens in their daily lives, they will begin to see them as indispensable allies in their lives. So, if the next bull run is going to be triggered in part by the tokenization of real world assets, we should also follow Real World Utility.
Beyond dApps to self-referential tokens
Decentralized applications are still centralized thinking. While their backend uses decentralized technologies, it still operates under the traditional premise that the application is the important thing, not the token. In a world centered around decentralized applications, an app is a utility, not a token. It provides functionality and hosts the interface that provides access to those features.
To get real utility in the real world, we must go beyond the application and put the utility into the token. All you need is a wallet; Tokens carry all other facilities. The token becomes a dApp itself and carries this utility wherever it goes.
The token must serve as a communication channel between the issuer and the holder; You must provide the owner with all underlying pricing and asset information. It should be able to connect to the wallet and provide the full experience without another dApp. All of these elements increase the value of the token itself, simply by making the token self-referential.
This also future-proofs the experience, as token holders can access the utility on any platform they choose – and app developers don't need to redesign an app for every new operating system that comes along.
Off-chain benefit
The utility of the token has also been viewed solely through the lens of the chain. Although blockchains are great for creating some utilities, like ownership and user rights, they're not great databases for all things. They are slow, general, and immutable. These are not great qualities for applications that require latency, the ability to easily upgrade and fix bugs, and for situations where token issuers do not want to publish all of their customer data.
Bifurcating these two worlds allows utilities to manage code as easily as any website, maintains data privacy, and experiments with web2 latency. This opens up a world of use cases that on-chain logic cannot solve on its own.
For example, we built the Smart Cat game as an example token with an interactive application with a visible front-end. To do this effectively, you need on-chain and off-chain logic: on-chain to manage ownership, while off-chain to manage the front-end game logic for a fun, frictionless user experience.
By enabling tokens to transcend blockchain limitations and embrace off-chain logic, we can begin to explore real-world utility that makes sense of the world beyond just being assets on the blockchain, ironically isolated from the “real world” they represent.
Discover greater price
The simple real-world utility that any token can carry is information, and an easy and powerful set of information that any token can carry would be price discovery. This simple tool can be applied to any token, as any token is an asset and holds value.
Take the game code, for example. You play as a character, and you have leveled up to level 9 out of 10, which opens up new levels of play. The token can now inform you that the going price of the token at level 9 is $X, and in the same interface, it allows you to rent or sell the asset. Although this information is dynamic and stored off-chain, it is transmitted using token which gives it a new benefit.
This information is conveyed as a benefit, to help the end consumer know the full value of the asset, and the seller to convey the true value of the asset. It's a simple real-world tool.
Advanced digital experiences
Beyond token gateway and proof of ownership, advanced utilities such as communication channels or tokens being applications themselves can open a new era of functionality.
For example, there would be no need to download a car app; Your token can allow you to access important functions such as unlocking, finding or starting your car. This removes all consumer friction from the car buying experience. There's no app to download, no registration, and no information setup required; It's all transferred in code.
Real-world facilities, such as asset management, may allow you to manage your assets directly from the token. Price discovery on the lease and sale prices of your car allows the owner to maximize his assets. With a simple click of a button on the icon, the owner can lease the car at these rates, get a loan, or sell the car.
Furthermore, the token issuer can communicate directly with the token. Manufacturers can inform you directly through the token of any defects, service needs or offers. Real-world utility, both on-chain and off-chain, can enable a better car ownership experience and create greater value for society.
To the real world
Of course, the real-world benefit must extend to the actual world. The more a token is able to integrate into the world around it, the more valuable it becomes. The vehicle token can easily connect to your service station, keep up with all service records, and game assets can move beyond being static proofs of ownership into dynamic interactive experiences in their own right. Not between the games, but the games and the outside world.
Just as a token can carry information, it can carry logic on-chain and off-chain. This is a utility that can let any third party know how to interact with the token in real time. For example, you can go to McDonalds and link your game code to the kiosk where you order your food. McDonald's can read the token and offer to upgrade your meal to the next level if you upgrade your meal to the next size. You can upgrade your meal, and they instantly upgrade your gameplay. All through the token.
We are very early in the world of token utility, but as we enable real-world assets, we must consider an equal dose of real-world utility to accompany them. We have to go beyond the basics of proof-of-stake and token gateway to create enough value for the world to care about tokens beyond speculation.
Innovations such as allowing tokens to become the centers of our digital worlds, seeing them as communication channels, helping holders better manage their assets, and allowing others to have greater price discovery, are just a few ways we can start. All of this is possible today if we are prepared for it.
