Blockchain technology has showered us many privileges. One of them is tokenization. Tokenization is the conversion of real-world assets into virtual tokens that will represent their ownership. Another term associated mainly with tokenization is non-fungible tokens, in short NFTs. They are tokens or mostly Ethereum-based assets that let us represent the ownership of unique items. Tiamonds is a project by LCX that believes in the upliftment of the financial market through tokenization. Tokenization enhances the liquidity and transparency of the asset. It makes the asset much easier to trace compared to real-world assets.
The global pandemic has sparked the NFT industry. Throughout the year, we have seen pieces of art, virtual land, memorabilia NFTs getting sold. As the NFT boom continues, various types of assets are tending to it. Diamonds as an asset class face a problem that other assets like gold, silver, or oil don’t face. Diamonds are non-fungible, due to which investors do not include them for asset diversification. Let us consider Gold; every gram of gold is of the same value as any other gram of gold. In other words, gold is fungible and hence, identical. However, each diamond is unique.
Previously, many times companies and institutions have attempted to use diamonds’ non-fungibility for profit. For instance, mutual funds and shares that are based on diamonds. Although mutual funds to some extent resolve diamond’s non-fungibility, there is always a risk involved because of the presence of third parties. Moreover, diamonds are easy to store and portable, which makes them vulnerable to theft. But as we tokenize diamonds, we see that the need for a third-party intermediary diminishes. Hence, NFTs are one of the most secure ways of representing ownership of valuable assets.
Tiamonds aims to leverage diamond’s uniqueness and enable users to invest in it without worrying about its liquidity.
The Tiamonds project mainly revolves around two main elements of its ecosystem –
Each diamond is different due to its color, quality, carat, and cut quality. This makes diamonds eligible for NFTs because they demand to be unique. Moreover, the diamond market is often associated with third parties and is highly irregular. As we tokenize diamonds to Ethereum based assets, the security risks reduce to a great extent. In addition, tokenization ensures the authenticity of the diamond, something which is lacking in regulated markets.
Tiamonds is an NFT built on the Ethereum blockchain complying with the ERC-721 token standards. Here are some of the benefits that Tiamonds offer:
We notice that as we turn diamonds into a token, we need to worry less about their security and authenticity. Moreover, NFTs enhance the liquidity of the assets making diamonds much more superior than usual.
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