VP Bank tokenized a watch to show people the process and benefits of tokenization. According to VP Bank, there is “overwhelming interest” in tokenized collectibles such as art or watches.
The Swiss Alps are famous for many things, such as spectacular mountains, cheese, watches, and now also digital technologies. So why not combine some of those things? Last week, Liechtenstein-based VP Bank tokenized the first watch, showcasing the advantages of tokenizing physical assets.
The vintage model “Royal Oak 14802ST” is now mapped on the blockchain. The showcase took place in the Vintage Lounge of the Huber watch store in Vaduz. Said watch has been owned for 30 years by Norman J. Huber, owner and CEO of Huber Uhren Schmuck Anstalt. The watch still exists physically, no worries, but now it has a digital clone.
“The watch will always be part of the Huber family collection and thus remain a centerpiece of the company,” said Hansjörg Roshard, watchmaker and manager of the vintage department at Huber. The goal of the showcase was to demonstrate how tokenization works and how Norman J. Huber benefits from the mapping of his watch on the blockchain.
Digital rights to real assets
Tokenization means creating a digital copy of the ownership rights to an asset on a blockchain. That could be the ownership of a digital property such as a digital piece of art or a digital currency, or the ownership right to a real-world asset such as real estate, a piece of art, or, well, a watch. Liechtenstein’s blockchain law – the TVTG – provides the legal basis for this tokenization which guarantees the legal link between the token and the physical object.
In the case of the watch, the tokens represent the property rights allowing the token holder to possess the watch. In other words: The holder of the tokens is also the legal owner of the watch. It’s like recording ownership of the watch on paper, just that it’s in a digital format. That brings various advantages.
Advantages of tokenization
By recording property rights on a blockchain, they become easily transferable, meaning the owner can easily transfer the rights to the watch in the digital space without any physical exchange of documents. The ownership also becomes divisible, meaning more than one person can hold the right to the watch. For example, the watch token could be split into 1,000 tokens, meaning 1,000 token holders can co-own the watch.
Having ownership recorded on a blockchain also makes the storage secure. If, for example, the original owner passes away, the tokens can easily be transferred to the next generation. It also creates transparency. In the case of the watch, the token owners have a real-time overview of their positions in VP Banks’s eBanking, asset statements, and tax reports. This makes managing their collection as easy as checking their bank account.
“Surveys of our tokenization services among key clients show overwhelming interest in collectibles such as art or watches,” explains Thomas von Hohenhau, Head of Client Solutions at VP Bank. “After tokenizing the first painting last December, we immediately received exciting client inquiries. Clients appreciated VP Bank’s approach, which combines innovation with tradition as a trusted private bank,” says von Hohenhau.
Image: (c) VP Bank