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In a recent publication, industry expert Jesus Rodriguez described his views on the implementation of security tokens. An asset class which he believes can propel the emerging security token industry is tokenized debt— and with plenty of good reasons.
Jesus Rodriquez is well known in the emerging security token industry, likely due to his background in finance, Distributed Ledger Technology (DLT), and Artificial Intelligence.
He frequently writes about security tokens, and has recently put forth some legitimate reasons as to why the young industry needs to shift from standardization to implementation.
Most recently, he wrote about the one aspect that he believes is a great fit to pioneer such a transition: tokenized debt.
“Whereas the pragmatist in me recognizes that we are still years away from having an infrastructure that allow us to re-imagine digital securities, there are immediate use cases that can catalyze the movement. From those use cases, I believe tokenized debt or cash flow offers a unique plethora of possibilities to unlock the potential of security tokens.”
Currently, security tokens entail ownerships claims concerning REITs, equity, investment funds, and other assets which are considered financial securities.
Especially when compared to equity, which he says “the current generation of security tokens has centered around”, debt securities is an asset class which brings the security token industry to mainstream investors. Here’s how.
Rodriguez says there are numerous benefits when it comes to tokenized debt:
Some of this benefits were illustrated by Rodriguez through the following matrix.
The real question, says Rodriguez, is figuring out how to implement tokenized debt. There are currently no native protocols when it comes to debt securities.
That’s why he says a debt security protocol could integrate numerous protocols which abstract the many different dynamics of tokenized debt. His initial proposal can be seen in the diagram below.
What do you think of Rodriguez’s proposal concerning the use case of tokenized debt? Will this become a vehicle to implement the tokenization of securities? Let us know what you think in the comments below.
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