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The transformation of traditional business models into innovative blockchain solutions is pursued by many but mastered by few. The integration of blockchain technology with real-world assets represents not merely a trend but a fundamental change in how industries approach market engagement and operational efficiency.
With the power of blockchain, companies are not just passively observing market changes; they are actively redefining asset management and transaction transparency.
We recently spoke with Bernard Yeung, the CEO of DualMint, which specializes in tokenizing real-world assets.
Can you introduce yourself and how did you get into the blockchain space?
I've been in banking for over 20 years before stepping into the Web3 space. I used to run trading and investments, interest rates, and FX for a bank on the treasury side.
We were accustomed to taking risks and exploring opportunities. I wanted to pursue my projects, which led me to explore different ventures such as F&B and entertainment businesses, including Whiskey and immersive projects in Singapore. When COVID hit, it changed the global business landscape, restricting travel and normal day-to-day activities. This situation sparked new thinking on how to incorporate blockchain, especially with Whiskey, which is how I met my partners. We explored business adaptations and processes suitable for the COVID restrictions.
The idea for DualMint emerged from five partners discussing whiskey, blockchain, legal, security, and logistics. We created an ecosystem within DualMint, drawing on our diverse fields of expertise. This collaboration is what defines DualMint today.
So, what is DualMint all about?
We started with a blockchain background, figuring out how to tokenize or create NFTs backed by physical assets. This led to the concept of 'Dual Provenance,' where we have both a digital and physical legal footprint, incorporating contracts that are digitally and physically bound. Hence, the name DualMint.
Initially, we focused on tokenizing items like whiskey, artwork, collectibles, and memorabilia essentially, any physical asset. We then considered the security aspects of anti-counterfeit technologies and logistics, which is one of the most challenging aspects. One of our partners specializes in advanced logistic service systems.
Our focus was on moving and storing items that have been tokenized as NFTs or physical items, ensuring the security of the NFT buyers. Over the last year, we've expanded beyond just collectibles and physical assets. We've explored various businesses, industries, and projects, realizing that tokenization can apply to a broad range of assets, including products, services, and intellectual property.
We've moved away from the term NFTs due to its negative publicity from the Web 2.5 era and are now focusing on tokenizing new world assets. It's not just about physical assets like whiskey or art anymore; it's about creating value from a wide array of assets. There are many considerations on what to tokenize and what not to, which I believe are important to discuss.
What is the Difference Between Real World Assets Tokenization and NFTs?
NFTs were originally about creating a digital footprint for something to be tokenized and sold. This approach lacked utility, as seen with examples like Bored Ape or a JPEG of The Rock selling for a million dollars. There wasn't a clear rationale or practical use.
DualMint, however, focuses on tokenizing physical aspects, ensuring there is a proper legal framework behind the blockchain. We don't deal with purely digital tokens. Instead, we aim for a 'Dual Provenance,' where both digital and physical formats are present. This approach means tokenizing real-world assets rather than just digital items.
The key difference is in utility. Tokenizing RWAs allows for usage in both digital and physical formats, providing tangible value and practicality.
What's Your Outlook on the Tokenization Space as a Small Subset of the Blockchain Space?
BCG and McKinsey have reported that the current market cap for tokenization of assets, including NFTs, is around $1 trillion, with projections reaching $16 trillion by 2030. This suggests the potential to tokenize almost anything and integrate it with blockchain technology. However, there needs to be a clear utility or benefit to buyers, sellers, or industries, not just hype like with many NFTs.
For example, NFTs for whiskey or art pieces sold for high values due to trends, but without substantial utility. Regulatory bodies in Hong Kong and Singapore have advised against tokenizing financial products like property or bonds due to the regulatory complexities involved. Private equity already allows for such investments without needing blockchain.
Tokenizing properties, for instance, doesn't offer significant advantages because tokens can't be used as collateral for loans. Therefore, tokenizing properties isn't practical without widespread acceptance and regulatory support. The utility of tokenization should focus on disrupting industries, creating value, increasing transparency, and reducing transaction costs.
Real-world assets tokenization can provide benefits for industries, buyers, and sellers. While mainstream adoption won't be immediate, it is expected to grow over time. Large private equity firms, like BlackRock, are beginning to invest in tokenized RWAs, indicating a shift towards this new era.
Early adopters, like us, have the advantage of improving our methods and staying at the forefront of these dynamic changes. We can adapt our current practices to meet future needs in the next two to five years.
What do you see the future of tokenization being like?
I think it will be quite dependent on various factors. For instance, consider Amazon and online shopping. Initially, people didn't see online shopping as a significant breakthrough because they preferred the physical experience of visiting stores. However, over the years, due to restrictions and changing consumer behavior, online sales have far outpaced physical retail sales. This shift happened over the last 15 years.
In the next 5 to 10 years, we will likely see similar adoption and adaptation of tokenization. Tokenization can lead to cheaper and more transparent transactions. For example, 100 years ago, buying shares involved physical certificates and brokers, a cumbersome process. Today, people buy and sell shares globally without ever seeing a physical certificate, trusting the system entirely. The ease, cost-efficiency, and transparency of transactions have significantly improved.
Shares took many years to evolve, but in the Web3 space, tokenization could achieve similar advancements in just 2 to 3 years. The rapid pace of technology, social media, and news dissemination will accelerate this adaptation.
It's insightful to envision the future with high adoption of tokenized assets. It promises significant benefits and advancements.
If You Were to Try to Convince Someone to Adopt a Real-World Asset, What Would You Say to That Person?
We worked with a Japanese heritage brand that is 200 years old and very traditional. The pitch to them was about how all brands and services fight for the same market share. In the travel industry or alcohol industry, it's always the same competition.
When we talked to them and got them to adopt DualMint and partner with us to create a token of their limited edition, we emphasized that it’s not just about making a token of a limited edition product that looks appealing. It's about helping the brand evolve to the next phase.
We explained that this effort might not take off immediately, but every brand must consider potential future opportunities. By creating a tokenized version of their product, they could reach new audiences who might not traditionally be interested in sake or Japanese rice wine. This approach could create a new following and engage their existing community, bringing them into the Web3 space.
Even if their older customers don't understand Web3, younger people within their community might be familiar with it and interested in trying the tokenized sake. Conversely, the Web3 community, which is generally younger and less familiar with traditional Japanese wine, might become interested due to the tokenization.
This process serves an educational purpose, helping people understand the benefits of tokenization for their industry. It can disrupt the industry, make it more efficient, and bring benefits to buyers, sellers, and the industry as a whole. These are the main reasons why people should consider tokenization from this perspective.
Link to the full conversation on YouTube below