Blockchain technology was initially designed to improve how financial transactions are verified and recorded. Over time, the use cases have expanded. It is possible to leverage blockchain technology to tokenize physical goods by creating token assets. This provides a useful tool for seamlessly exchanging and storing legal ownership of goods on an immutable distributed ledger. Each tokenized asset will, therefore, have an associated value depending on what it represents in the real-world. Tokenized assets are an excellent method by which to prove who owns the corresponding physical good. It is easy to transfer the ownership peer-to-peer without future disputes or the worry of records becoming maliciously altered. It offers potential new trading markets which were not possible with traditional centralized technology or infrastructure. SINOVATE plans to deliver asset tokenization in the future according to set roadmap goals. It will be facilitated by the InfiniteChain part of the network.
ASSET CREATION EXPLAINED
To help explain asset creation, it is beneficial to use an example. Fine pieces of art are usually classed as assets. Astronomical amounts of capital are invested in highly sought after paintings, sculptures, or artifacts.
Fine art is considered valuable due to its inherent rarity, age, and specialty. It has mostly been the domain of wealthy individuals who pay high prices for the privilege of owning the piece after an auction. It therefore excludes small investors from owning an individual piece or a part of it. Furthermore, wealthy investors take on all the risk by owning a valuable asset. They take on all the risks and are liable for when the piece of fine art potentially becomes damaged, lost, or stolen.
One advantage of tokenizing fine pieces of art on the blockchain is that it allows for the asset to be owned by multiple parties. Each token grants the holder a portion of ownership. It allows smaller investors to have a stake and share the risk of ownership with other parties. It is then possible for investors to increase their stake in the asset or liquidate their investment to others by selling their tokens on open trading markets.
INFINITECHAIN / MAINNET RELATIONSHIP
As described above, the SIN InfiniteChain will be utilized to create customized token assets that can be assigned to innumerable physical goods or digital data files in the real-world. For instance, a token asset can be assigned to grant ownership to a piece of valuable fine art, as described earlier. It is then only the token asset holders who have access to it.
What follows is the technical breakdown of how to convert SIN from the main SIN blockchain to a token asset (SSIN) on the SIN InfiniteChain, and vice versa:
ASSET CREATION FROM SIN
To create 100 SSIN coins on the SIN InfiniteChain, Alice must send 100 SIN to SinDeviseConvertionInfiniteChainxxxx and with the DeviseID (100001). This tx will be saved in block N of mainnet. After 21 blocks have timestamped on the mainnet, on the SIN InfiniteChain, first block(1) (N+21 of mainnet) staker will generate a coinbase transaction with value 100 SSIN and send to Alice.
ASSET CONVERSION TO SIN
The same mechanic applies to revert SSIN to SIN coins. Bob sends 100 SSIN coins to SinDeviseConvertionInfiniteChainxxxx and gives the DeviseID (100000). This tx is saved in block K of the SIN InfiniteChain (block L of mainnet). After 21 blocks of mainnet (L + 21), the miner generates a coinbase transaction with value 100 SIN and sends it to Bob.
TRANSACTIONS AND BLOCKS
Considering the SIN InfiniteChain, only the “Devise” transaction type is accepted. What follows are some details of the Devise Transaction:
– The unique identity of Devise – In the new system, each “Devise” has a unique identity. Today, SIN coin has a DeviseID 100000. New coins on the SIN InfiniteChain (SSIN) have a DeviseID 100001. The user of the new system can create a new “Devise” (asset creation) with an ID greater or equal to 100002.
– New standard name – DEVISE_TX – For “separating” the transaction in mainnet and InfiniteChain, a new transaction standard is present in the network: DEVISE_TX.
– New OP_DEVISEID / OP_CHECKDEVISE – OP_DEVISEID is a number and represents the unique identity of a Devise on the network. OP_CHECKDEVISE is used to make sure that: The Devise is the same as the previous transaction and that Tx is FALSE if the Devise relation is incorrect.
Every user on the network receives two versions (type) of the block from the main SIN blockchain and SIN InfiniteChain. The system controls the blocks received before connecting to the local blockchain. What follows are the conditions to validate the blocks:
– The main SIN blockchain – If the second transaction of the block in the mainnet is a Coinbase transaction, the system checks all blocks N-21 of SIN InfiniteChain and verifies both the amount and the user who burnt coins in the SIN InfiniteChain.
SIN InfiniteChain – If the first transaction of the block in the SIN InfiniteChain is a Coinbase transaction, and the block is the first block related with block N-21 in the mainnet, and there is a user who burnt coin to create an asset at block N-21, the block is considered as “valid.”