DIGITAL ECONOMY: Tokenized property
International Conference on Finance, Accounting and Auditing (ICFAA 2020),
December 19th, 2020
Hanoi City, Vietnam
PhD Le Hong Nhung & PhD Nguyen Xuan Dung
Sao Nam Co.,ltd
This article analyzes the major market factors and legal requirements in today's emerging tokenize property market, the possible correlation between the digital content market, blockchain technology and Non-Fungible-Tokens. The explosive growth in market size with participants varied from large multinational corporations to the technology community and users. This has created both several challenges and opportunities for legislation, new technology and markets, especially as they pertain to essential economic values such as financial factor. This article describes the three fundamental elements (Non-Fungible-Tokens digital content markets and blockchain technology) and begins to explore how lawmakers, economists and technologists can tackle the challenges of making encryption of digital assets, legal requirements-copyright in the creation, transaction and storage of digital assets. This current approach focuses on blockchain, Non-Fungible-Tokens, and digital content market data requirements, including definition selection, market size analysis, and basic features of the new technology. We demonstrate the approach by describing the proposed conceptual value of the tokenization of real-world asset and digital assets, a new institution in the digital economy. The need for the coordination of law, justice, technology and finance to protect and facilitate tokenize property development without deviation, a more complete marketplace in the future.
Keywords: Digital economy, digital content, tokenize property, Non-Fungible-Tokens
JEL code: ICFAA 2094
1. Introduction
With the revolution of the internet, Digital economy- Tokenized property has become an essential part of our modern life. While digital assets and digital contents nowadays can be transmitted easily from one to another, copyright has become a prominent issue globally. Though various forms of laws and regulations across countries have been trying to address the issue, costs and administration work required are hurdles that prevent owners- creators to seek their rights and copyright protection.
Famous entertainers or media businesses and talented creators such as artists, photographers and designers now find themselves connected easily with fans all over the world. Non-Fungible-Token (NFT) is a blockchain token that represents a unique asset. It can be a digital asset or a tokenized of the real-world asset (C. Blenkinsop, 2018). NFT is a new, innovative building block of the digital world. Just similar to JPEG or PNG for file formats, anyone can transform a digital content to a “new format” called NFT which is recorded on a public blockchain network. There are several of the cases that NFT can be used: Virtual assets, for example, Ethereum and internet name service which offers domains has turned each of these domain names into NFT so they can be bought and sold, while Unstoppable Domains has done the same for their addresses. The other platforms for instant Decentraland allow customers to buy plots of virtual land. Real-world assets field is at an early stage, however, it’s possible to tokenize real-world assets such as real estate, with Non-Fungible-Tokens (NFTs) being used to prove that someone owns a piece of land, apartment and shophouse. The most applicable way is in the art industry, the digital artist has an anxiously protecting their copyright and in fact, it can be harder for talented creators to earn a living. With NFTs, buyers can buy a creation and proudly showcase it in a virtual space, with blockchain offering proof of freeholder. Artists can get a higher cut of the payment and even portion out a margin profit from future sales, to create recurring revenue currently.
Well-known brands get into Tokenized property: Formula One, big sports company has signed a licensing contract with Animoca brands which allow players build a collection of NFTs including cars, parts and drivers in an online game. Another major milestone for adoption tokenized is Samsung, a technology gain’s hi-end Smartphone product has now come pre-installed blockchain wallet called Enjin where NFTs can be stored. We are going to introduce the primary concepts of the overall digital content market, blockchain technology and NFT smart contract in the following paragraph:
2. Literature review- framework and Method
- The digital content world market
Digital content creation market has observed large supply-demand from small businesses to large corporations. Organizations from different industry verticals have adopted the digital content format to promote their logo, product or any other information. The widespread of social media such as Facebook, LinkedIn, Twitter, and others have created an enormous demand for digital content in the modern age (OECD, 2015). The growing popularity of smartphones, tablets and e-Readers, have significantly increased the number of digital content viewers. Additionally, the e-commerce industry is observing a spontaneous growth that has further added to the use of digital content, to display their products images, videos, and catalogues online.
Increasing requirements for digitalized content from various business sectors is a key factor expected to drive the growth of the global digital content creation market over the forecast period. Reportlinker.com announces the release of the report "Global Digital Content Market 2020-2024” reported: Global Digital Content Market 2020-2024 The analyst has been monitoring the digital content market and it is poised to grow by $ 519. 83 billion during 2020-2024 progressing at a CAGR of 15% during the forecast period (marketwatch.com).
As can be seen, digital technology is at the core of significant change in many areas of our lives, including digital content for e-commerce, social media, and even in the cultural field made up of concrete and tangible pieces of art. The rise of digital technology has acted as a way to generalize the process of buying a piece of art previously monopolized by auction houses’ regular customers. Online marketplaces selling affordable paintings and drawings are popping up and reshaping the rules of offer and demand. Thousands of unknown artists now have access to an online market, taking care of all the buying and promoting processes.
Many national museums are trying to take this technological turn by digitizing their collection and archives in 3D, which is a new powerful marketing tool. They will be able to diffuse easy access to their collection to any clients that have access to an internet connection. Digital art is also helping the preservation of our cultural heritage. Digital art is moving fast, the global Digital Art Board market size is projected to reach USD 460.1 million by 2026, from USD 279.4 million in 2020, at a CAGR of 8.7% during 2021-2026 (marketwatch.com)
- Blockchain technology
Blockchain technology is a time-stamped series of records (same as a record in a spreadsheet in the real world but written only once) that is controlled by a group of network computers not owned by any single unit (A. Rosic, 2013). The blocks of data are bounded and secured to each other like a chain using cryptographic principles such as authentication, confidentiality, non-repudiation and integrity. All data stored on the blockchain have the same history available to all network users. With this mechanism, the chances of duplications and fraudulent activity are automatically eliminated without the need for any third-party intermediaries (H. Shaw, 2017).
- Nature of NFT’s
NFTs are tokens minted on a blockchain network that are unique and irreplaceable. In opposition, the fungible tokens relate to tokens that can easily be replaced by the other thing identical and are interchangeable (M. Bal and C. Ner, 2019). NFT’s can tokenize assets but will usually not treat as a financial instrument. So, what type of tokens are NFT in a legal perfective; are they security, currency, utility asset token or even a new special not yet classified. When producing any type of token, it is vital to confirm what kind of rights will be provided to the holders. If token owners will have rights sharing benefit or any profit, such token will possibility to be treated as a security token and will regulate under the financial laws. NFT’s usually will not grant any such rights, but will instead give access to future digital contents.
- Framework and Method
This research aims to find a set of conceptual, a performance of the digital content market on the repeatedly demand-supply in the previous research. The characteristic of this research is that the theoretical foundation is not based on a particular theoretical model but rather on the summarization of some theories. Mostly the NFT theoretical model, in addition to the Blockchain theoretical model and the Digital content market theoretical model for the digital economy. Based on these major theoretical models, specific research for tokenize property around the world has been developed, each country at a specific period having its own specific conceptual. The reason is that three main theories have been put into applied research in the tokenize property industry of countries because their usefulness has been demonstrated by previous research. Conceptual included in the research are not separated from specific research, and a theoretical model, but are summarized and screened from various research of the worldwide.
The research process has been performed through two main steps: qualitative research and quantitative research. The qualitative research: using in-depth peer-reviewed research techniques. The quantitative research: using descriptive statistics techniques via data analysis with the assistance of internet search engines.
- Results and Discussion
From an economic perspective, Blockchain technology- NFTs can be support tokenized digital assets and real-world assets at the same time, where the economic value of an asset is changed into a digital format. As mentioned above, practically any asset can be tokenized such as domain names, real estate, digital content etc. It is important to clear out, that tokenized assets can provide some of the economic rights; the token holders of such assets get merely financial equity.
Over the last few years, policymaker, economist and technology together with justice have the effort to establish timely regulations and oversight the process of tokenizing assets market. However, at present, most of the tokenized property does not act for ownership; rights to use goods- property rights, income from goods, exchange of goods to others, right to exercise property rights and other copyright.
Digital economy institutions can help to control and adjust the behaviour of the tokenize property market. A suitable institution has policies to encourage and develop new technology applies, open digital markets, overcome negative outcomes that are easily accessible to communities and users. To drive higher economic value, safe and efficient for the tokenize property industry.
4. Conclusions and Policy Implication
At the correlation of the digital content market, blockchain technology and NFTs can either help drive or hinder progress to address the balance between policy marker and digital assets supply-demand interests more efficiency. To legislate a timely legal framework to ensure the regulation of digital asset operations is not only urgent requirements. Developing standards and crucial criteria for the digital asset market, the application of new technologies and computer software should also be needed synchronously to catch up with today's technological innovation trends.
New developments in the tokenize assets market space are emerging all the time. Under the tokenization trend, it will be used to tokenize practically many fields that are possible to tokenize such as gaming industry, intellectual property, physical property-real-estate, records and identity verification, financial documents, ticketing, voting, loyalty program KYC procedure etc.
The supply and demand of the digital content market and blockchain technology can be the tools that support the new digital asset- NFTs develop to comply with national and international laws. We believe that with the cooperation between legislators, technologists, economists and businesses relevant will address both the regulations and the technological challenges in this complex tokenize property marketplace to support and promote a more complete digital asset market in the near future.
5. References
A. Rosic (2013), “What is Blockchain Technology? A Step-by-Step Guide for Beginners” https://blockgeeks.com/guides/what-is-blockchain-technology/
H. Shaw (2017), “A Cryptographic System Based upon the Principles of Gene Expression”
M. Bal and C. Ner (2019), “NFT racer: A Non-Fungible Token Tracking Proof-of-Concept Using Hyperledger Fabric”
C. Blenkinsop (2018), “Non-Fungible Tokens, Explained, Cointelegraph” https://cointelegraph.com/explained/non-fungible-tokensexplained
OECD (2015), “Enquiries into intellectual property’s economic impact”, Chapter 5 https://www.oecd.org/sti/ieconomy/Chapter5-KBC2-IP.pdf
Marketwatch (2020), “Global Digital Art Board Market Size, Share 2020 Movements by Development Analysis, Progression Status, Prominent Players Updates, Revenue Expectation till 2026 Research Report by Industry Research Biz” https://www.marketwatch.com/press-release/global-digital-art-board-market-size-share-2020-movements-by-development-analysis-progression-status-prominent-players-updates-revenue-expectation-till-2026-research-report-by-industry-research-biz-2020-09-21
This is a research press release from Sao Nam Co. LTD, a partner of Kingchain