In bitcoin we trust?
Part 5: Tokenisation in the age of Web3
From non-digital to digital assets
We have seen that tokenisation is the process of having either a physical or digital token act as a representation of something of value, whether this be an asset that is tangible or intangible, or one that is fungible or non-fungible. Having given an overview of tokenisation in Part 4, in this part of our enquiry we will consider it in its most recent form.
To do so, however, we need to make a third distinction that compliments the two we made in Part 4. Thus, in addition to fungible and non-fungible assets, and tangible and intangible assets and their corresponding tokens (both physical and digital), in the age of Web3 we need to distinguish between digital and non-digital assets. Crucially, this distinction is not the same as that between tangible and intangible assets. Unlike tangible assets that are always non-digital, and intangible assets that can, but need not be digital, digital assets are only ever digital. With this distinction in mind, it becomes clear that non-digital assets are all the assets we have discussed thus far. Thus, despite some being fungible (a £50 note), whilst others are non-fungible (Leonardo’s Salvator Mundi), and some are tangible (real estate) whilst others are intangible (a skill, or service), all of these assets are non-digital.
In contrast to these, and contrary to the ubiquitous representation of bitcoin as a golden coin with a ₿ symbol stamped on it, bitcoin and other cryptocurrencies exist only as computer code, and as such are digital assets:
Web3 Tokenisation
Of course, one may object that bitcoin is not all that different from regular money. In today’s cashless economy, for instance, money is also digital, as the widespread use of debit and credit cards, and smartphone payment and banking apps attests. Moreover, bitcoin is a fungible asset that like money is non-unique, divisible, and mutually substitutable. One bitcoin is worth 1 BTC no matter who owns it, nor in which kind of on- or off-line Web3 wallet it is stored, and it is also divisible into smaller units, which in its case are called “satoshis” after its pseudonymous inventor (or group of inventors) Satoshi Nakamoto.1
But bitcoin is not just a digital version of regular money. As we saw in Part 2, fiat currency serves as a medium of exchange in a “polycentric” financial system based on centralised entities (think here of central banks, private banks, payment processors, and myriad other institutions that offer financial services of one kind or another). By contrast, bitcoin exists and is used on