How to Prove the Value of Underlying Assets with Blockchain

Over the past five years we’ve seen a wide variety of digital assets grow, mature, and flourish on blockchain, the majority of them on Ethereum. Living on a blockchain is the key distinguishing factor between these kinds of digital assets, usually referred to as Tokens, and other (financial) assets. While some tokens are created purely for fun or for the sole purpose of raising capital for a startup project, a sizeable number of tokens come with some sort of promise of value backing. Because blockchain is still a new technology, and because blockchain startups aren’t always a great poster child for stable, safe investments, there is naturally a lot of confusion and mistrust around tokens, and what makes them valuable. So, in this article we are going to ask what this digital promise of real value is actually worth (pun intended).

One thing to note: the various types and classifications of tokens are always a matter for legal experts, and can even vary from jurisdiction to jurisdiction. This article is not about providing an overview of all these token types and their classifications; rather we want to discuss if it’s possible to trust that a token can in fact represent a physical asset and, if so, how to be sure of its value.

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