Including a code sample using the ERC721 standard. Introduction "I've always been a sharing person." - Young Thug In this article I’m going to implement a tokenization contract for digital assets that is both simple and effective. Please feel free to if you find it useful. reuse the code The second purpose of this article is to show why some use cases for blockchain development and . Often the key is in whether decentralization is reasonable or not. are promising others are more in doubt Blockchain allows us to build software that works in a different way from traditional solutions. With blockchain you can build decentralized applications that can be trusted to store data that hasn’t been tampered with. Decentralization is a necessary requirement, you could develop many different blockchain solutions but for any of them to reach a profitable scale . It’s a tricky one. you have to accept that you won’t control it An example of a use case where decentralization works is Bitcoin. Its implementation as a trusted blockchain application enabled Bitcoin to grow organically without any centralized control or strategy. Bitcoin became some sort of currency or asset and made as enough people decided it had value. some people very wealthy Now it is possible to build blockchain applications easily on top of platforms such as Ethereum or Hyperledger and the amount of ideas trying to exploit the blockchain opportunities has exploded. A common pattern for blockchain applications is the . Many markets in the world are highly inefficient and market makers charge a large proportion of the proceedings. Blockchain by nature requires to remove intermediaries, returning the intermediation costs to the users. implementation of some market With blockchain you can build decentralized applications that can be trusted to store data that hasn’t been tampered with. Decentralizing a market is not always simple. In a previous article I gave an example of and real estate assets easily converted into blockchain-based REITs (Real Estate Investment Trusts). But even with a good implementation, decentralization is challenging in real estate markets due to trading with heavily regulated physical assets. This undermines the viability of the solution. how real estate can be tokenized When discussing tokenization schemes I like to make a very clear distinction between physical and digital assets. When tokenizing physical assets there are complex relationships with the physical world. Questions like who physically holds the asset are important. Given that one of the main things that you can do with an asset is to transfer it you need to synchronize the token transfer with the asset transfer which is not an easy task. Tokenizing digital assets is much simpler. You can use a token representation of your digital asset and integrate the token with the asset very easily. We can easily automate whole business processes. Let's see an example. Business Case In our business case we are going to manage software licenses in a blockchain platform. These licenses are going to use a pay-per-use model. That’s it, easy. Pay-per-use is a valid monetization process but it is quite cumbersome in managing the licenses. Offline licenses are often easy to crack and to have online licenses you need to maintain the servers. At the very least it will be a bit of a headache. Using blockchain we can implement an efficient license system. Other features that we are going to include is a facility that collects payments to top up the licenses, and the opportunity for users to trade their licenses if they wish to do so. In addition to all this, maintaining the license system will be paid for by the users at a very low rate. Implementation An contract generates uniquely identifiable tokens which cannot be merged or broken down into fractions. These are very useful features for tokenizing assets and that often makes the ERC721 contract the ideal starting point for such schemes. ERC721 The best known example for an ERC721 token are . These are digital pets that are identical except for some aesthetic features . You can easily see that any two cryptokitties are different, and you can’t divide or merge cryptokitties. cryptokitties coded in their identifier Cryptokitties are quite popular, but they are not the kind of example that sends business minds flying. I prefer to show an example that people can make money with. Our license management contract is going to use the ERC721 standard. I suggest that you even if you are a business person. Even if you don't know how to code you should get an idea of what you can do by reading the method names and the comments. have a look at the code An ERC721 contract generates uniquely identifiable tokens which cannot be merged or broken down into fractions. each token generated represents one license to use the software. Whoever holds that token is licensed to run the software. If the token is transferred, so is the access to the software. In our contract The licenses will expire after some time and they will have to be topped up to remain valid. For that we are going to create an additional mapping between licenses and expiration dates. We will have one method that accepts Ether and pushes the expiration date of the licenses into the future. After that we only need one more method to check expiration dates which is very simple. The full contract is below: pragma solidity ^ ; ; ; ; contract LicenseToken is ERC721, Ownable {

   event TopUp(uint256 licenseId, uint256 expire); mapping( uint256) internal expire; {
       uint256 timeToAdd = msg.value;
       expire[_licenseId] = .max(now, expire[_licenseId]) + timeToAdd;
       emit TopUp(_licenseId, expire[_licenseId]);
   } {
       _mint(_to, _licenseId);
   } { expire[_licenseId];
   }
} 0.5 .0 import "openzeppelin-solidity/contracts/token/ERC721/ERC721.sol" import "openzeppelin-solidity/contracts/ownership/Ownable.sol" import "openzeppelin-solidity/contracts/math/Math.sol" /**
* @title License Token
* @author Alberto Cuesta Canada
* @notice Implements an ERC721 license token with validity by top up.
*/ /**
    * @notice mapping from token id to expire date (in unix time)
    */ => uint256 /**
    * @notice Delay the expiration of a license by a second per wei.
    * @param _licenseId The license id.
    */ ( ) function topUp uint256 _licenseId external payable Math /**
    * @notice Mint new licenses, only owner.
    * @param _to The address to receive the license.
    * @param _licenseId The unique license id.
    */ ( ) ( ) function mint address _to, uint256 _licenseId public onlyOwner /**
    * @notice Retrieve an expire date for a license
    * @param _licenseId The license id.
    */ ( ) ( ) function getExpire uint256 _licenseId public view returns uint256 return Conclusion Tokenization of assets in a blockchain is a popular concept but not all use cases are equally suitable for it. Tokenization of digital assets is a perfect fit that allows to produce simple yet efficient implementations. Automation is frequently seen as one of the benefits of blockchain, but automation is only natural for digital assets. The ERC721 contract gives us very useful functionality that can be used in a variety of schemes, always with the condition that the assets need to be truly unique, indivisible and susceptible to be traded. The software license use case presented is a good fit for a tokenization with an ERC721 standard. Other use cases should be tokenized with an ERC20, a custom contract or not tokenized at all. Deep knowledge of the business environment and an . open mind on how to monetize a decentralized solution are key

Ethereum

How Not To Run Out of Gas in Ethereum

How to Tokenize Houses on a Blockchain

Ask me a question! 

How To Tokenize Digital Assets on the Blockchain

About Author

Comments

TOPICS

THIS ARTICLE WAS FEATURED IN

Related Stories

A Linked List Implementation for Ethereum [Deep Dive]

108 Stories To Learn About Blockchain Adoption

10 Tools for Blockchain Development

133 Stories To Learn About Solidity

287 Stories To Learn About Blockchain Development

2022 Web Development Trends, Mistakes, and Misconceptions: What You Need to Know

A Linked List Implementation for Ethereum [Deep Dive]

108 Stories To Learn About Blockchain Adoption

10 Tools for Blockchain Development

133 Stories To Learn About Solidity

287 Stories To Learn About Blockchain Development

2022 Web Development Trends, Mistakes, and Misconceptions: What You Need to Know

Light-Mode

Classic

Newspaper

Minty

Dark-Mode

Neon Noir

Minty

HN StartUps