Hackernoon logoA CEO’s Perspective: ‘What I’ve Learned From Building A Tokenization Platform’ by@Elitium

A CEO’s Perspective: ‘What I’ve Learned From Building A Tokenization Platform’

Elitium Hacker Noon profile picture


Elitium is your Digital Economy to live a life of independence, value and growth.

When I co-founded Elitium in 2017, our mission was to create a platform that delivered a ‘next-level luxury experience’ enhanced by blockchain technology.

At the time, we didn’t have a precise idea of what next-level luxury would entail. 

We just knew — thanks to the success of a crypto-payments solution built by my Elitium co-founder for Boatsters Black, another of my companies — that blockchain could enable a better experience in the luxury sector (an industry that’s been traditionally shy of innovation).

Over the last three years, the concept behind Elitium has become more concrete.

In no small part thanks to the many conversations I’ve had with people across luxury, finance, and technology — with each new encounter sparking a fresh idea.

One of these conversations happened during an event hosted by Boatsters at the 2019 Monaco Grand Prix.

I was chatting to a long-time friend named Jimmy, the owner of a 72m superyacht; we talked about The Serenity; I answered questions about Elitium.

At some point, the conversation shifted onto a thought:

—”What if we could somehow connect Jimmy’s yacht to the utility token we had created at Elitium?”

That was the first time I had ever considered looking into tokenization.

It Was Time To Learn — And Quickly

After all, The Serenity is a valuable asset. 

It reflects the next-level luxury concept and, given it has an extremely profitable business model, it might have presented a compelling investment opportunity for early-adopters of the Elitium platform.

Moreover, early 2019 had seen the emergence of the ‘security token’ concept: of using the blockchain and cryptocurrency to create digital shares in real-world goods.

So Jimmy and I decided to research if we could use EUM to tokenize his yacht, selling a percentage of his stake to release capital — and redirecting a percentage of the yacht’s profits to token holders.

Then came our first big lesson.

There’s no way to link an asset — like a yacht — to an existing utility token. 

Securities law dictates you have to create a separate security token every time you run a new digital share offering.

So I had a new mission.

I needed to find a white-label platform we could use to turn his yacht into a standalone security token. Six months of research led me to Switzerland, then across the USA.

I looked into every tokenization platform I could find — and my efforts culminated in three more insights:

  • Existing solutions were expensive
  • Most platforms were hard to navigate
  • Every option lacked at least one key feature

There was only one thing left to consider.

If we really wanted to turn our idea into a reality, we might have to build our own solution.

But as I looked into the commercial side, I came to a conclusion. No matter the prestige of an asset like a yacht, its value will always decrease owing to depreciation.

Few investors will buy digital shares in an asset that’s only going to decline in value, even if the earnings-based dividends are secure — so Jimmy and I put our ‘yacht on the blockchain’ idea on hold.

But the tokenization concept burned like an ember in my mind.

I needed to find an asset with real financial prospects that could allow me to create a genuinely engaging tokenization proposition. Three months more research, and I finally settled on real estate.

"...Why real estate?" you ask

Well, because bricks in the ground developments (like luxury resorts in exclusive locations) offer the potential to deliver both capital growth and dividend payments.

There was the offer — now, it was time to get on and build.

Navigating New Obstacles

It’s funny how an idea can take hold.

What started as an idle conversation had morphed into a burning desire. And I was intent on creating something truly unique using everything I’d learned.

Something next-level that delivered on the Elitium vision.

At that moment, another conversation helped me see how this could all soon be possible.

Securing The Technical Expertise

I was introduced to Sachin Singh, the CEO of Syncrasy: a Delhi-based company with fourteen blockchain programmers who, at that time, were building a tokenization platform.

Sachin’s team had already spent twelve months on their solution.

A short demo highlighted the considerable potential of their platform, but I instantly saw the shortcomings: the UX would need a lot of work if the product was to gain mainstream appeal.

So I proposed joining forces. I suggested we connect Syncrasy’s domain expertise with the design and commercial know-how of the Elitium team.

We settled on a Joint Venture agreement — and after a four-day meet-up in Amsterdam, the team aligned on a new mission:

“To deliver a digital share platform that’s as simple to use as any leading traditional trading platform.”

Simple on the surface, but the challenges ran deep.

To succeed, we would need to:

  • Sell a crypto-based solution to a non-crypto audience
  • Step away from all crypto language (like Fiat, tokenization, even cryptocurrency)
  • Create a familiar onboarding experience (including standard identity verification, no terms like ‘KYC’)

My early research had shown no existing digital share platform offered a comparable experience to traditional share trading platforms. And no-one uses the blockchain to make investing simpler. 

Instead, most platforms merely focus on the fact they use the blockchain and hope that fact alone will sell.

But when someone buys company stock, they only care about the price of the share and the ease of the investment,  so our platform would have to offer a similarly organic experience and present the novel ‘invest in the stock of a hotel’ opportunity in familiar surroundings.

But every step forward presented a new challenge.

Even though we knew what to build and how: we now had to contend with regulations.

Acquiring The Right Licenses

If you want to work in crypto, make sure you understand the regulations: fail to do so, and you'll quickly end up on the wrong side of the law.

Elitium already has a ‘Memorandum of Advice’ from a respected law firm that confirms our cryptocurrency is a utility token. But as we are entering the field of security tokens, we now have to satisfy a whole host of new requirements.

We started by registering a new business under the name Elitium Capital. And we opened its HQ in Zug, Switzerland — a city with some of the most evolved and progressive regulations in the blockchain space. 

Our presence in Zug is the first step in ensuring our security tokens fall within Europe's regulatory framework.

What we now need is a ‘No Action’ letter from the Swiss Financial Market Supervisory Authority, FINMA (we’ve made our application; we’re confident we’ll have approval soon). 

Next up is getting an officer to manage the operation

COVID-19 put the brakes on finding personnel. But as life returns to a more normal pace, so has our progress. We expect to have someone on the ground in Europe in a matter of weeks. 

That said, we have global aspirations as well.

Elitium Capital will launch in the USA as soon as possible. However, regulations are even more involved State-side, so we’re working with a second strategic partner to smooth that path to launch.

Once we’re more established, we can get the licenses we need to operate as a standalone entity.

The Question On Everyone's Lips: Why Can We Succeed Where So Many Others Have Failed?

In my eyes, what makes the Elitium Capital story so compelling is its organic roots.

An idea stemmed from a conversation. And the concept has grown through both research and a continued desire to build on our existing network: our team knows all the right people to give Elitium Capital a real shot at success.

Elitium is rooted in the luxury industry.

And it’s thanks to this background that we've already sourced an exciting prospective real estate tokenization portfolio, including:

  • Three hotels in the United States
  • A luxury resort in the United Kingdom
  • A luxury home development in an equestrian setting — also in the UK
  • And one secret escape in The Caribbean

Yes, COVID-19 has delayed our launch — but we’re due to list our first offering later this year. And we’re more confident than ever we can succeed.

To start with: we see coronavirus as an opportunity as much as a risk

Developers will need fresh sources of finance if they’re going to survive, meaning Elitium Capital could quickly become the platform that saves them.

At the same time, it could give investors a place to channel idle funds, which is why we’ve worked so hard to get the investor side right by consulting with our board member and previous Plaza Hotel owner Shahal Khan: one of the pioneers of real estate tokenization.

Shahal’s efforts to tokenize the Plaza came in 2017 — at the height of the ICO boom — which led him down a few wrong paths. 

But together, we’ve been taking his learnings and applying them to our own strategy, leveraging his experience to overcome obstacles before they arise.

Shahal has delivered crucial insights to keep us on track, even as things threatened to fall apart. His domain expertise and personal real estate portfolio will all be essential to how our story unfolds.

The Elitium Ecosystem Effect

Finally, we have a secret weapon.

Elitium Capital will be part of the broader Elitium ecosystem. Meaning we can leverage digital shares to deliver the experience I spoke about at the start of this article.

We can integrate share offerings into our lifestyle application to create the next-level luxury experience — letting anyone:

  • Buy shares in luxury hotels or resorts using their preferred currency
  • Get dividends paid out in a stablecoin to guarantee the investment’s value
  • Use the same app to reinvest returns in a staking program that offers up to 6.5% rewards
  • Pay to operate a masternode for up to 25% rewards

Further, by connecting the digital shares with our native cryptocurrency EUM, we can potentially create the first digital currency backed by real-world assets.

The idea is for Elitium to own 1% of every asset sold under Elitium Capital, which will tie 1% of each digital share listing directly to EUM — and give the currency a concrete, asset-backed basis.

In essence, it means Elitium will have a secure treasury in place.

  • No other cryptocurrency can claim that
  • The US Dollar (nor any Fiat currency, for that matter) can claim that

And should another crisis of similar magnitude to the pandemic strike, Elitium will always be able to fall back on its treasury.

We can even protect the value of our holdings by further diversifying our investment portfolio — and this will mean that, even if Bitcoin and other altcoins crash, EUM could theoretically survive.

Elitium Capital Is The Next-level Luxury Experience

For me, Elitium’s ecosystem of products can become the ultimate luxury experience.

Elitium will one day represent a single space in which users will have multiple investment opportunities alongside the chance to spend their returns and rewards on a luxury watch or a money-can’t-buy experience.

At some point, we hope to extend our services into 'timeshares on the blockchain' or 'discounted stays with exclusive investor-only spaces.'

We believe the luxury appeal gives Elitium Capital additional value over competitor offerings. Ultimately, this characteristic could help it attract an audience. 

After all, how many platforms connect digital shares with staking, staking with masternode rewards — and rewards with unique products and experiences.

The answer? There aren't any.

Elitium Capital is unique. And it will soon become the first part of Elitium’s next-level luxury experience.

This is purely educational content. It is NOT financial advice. Cryptocurrencies are extremely volatile and unpredictable, so always do your own research before investing.


Join Hacker Noon

Create your free account to unlock your custom reading experience.