Virtually all of the crypto debate centers on cryptocurrencies and NFTs. But it’s at the confluence of Blockchain technology and physical traceability where the important action is.

It’s the internet of things (IoT) applied to real-world things. That is, the tokenization of assets and physical objects for recording and management purposes, using Blockchain technology.

But in general its quite innovative to tie a digital token to a physical asset. And because because almost anything can be tokenized then:

– In the case of physical assets, such as real estate, art, etc. the value of the token or NFT is tied to the value of the physical asset.

– In the case of virtual assets, such as metaverse real estate, generative art, etc. value might be difficult to determine.

– The case of tokenizing people has Digital ID purposes. Most analysis forget about this point, but its going to impact people on the technological, health and privacy fronts.

In general, biunivocally assigning a physical object to a Blockchain presents enormous technical (and philosophical) challenges.

For example, you create an NFT of a piece of art. What prevents the owner to create a second NFT of the same object?. Tokenization should take into consideration the biunivocal identification of the object, as well as each and every transaction recorded in the database.

Main challenges:

Tokenization can implicate several US and EU laws, including those related to licensing, securities, anti-money laundering, sanctions, intellectual property, gambling, and others.

This implies an asymmetric key function in which the private key is biunivocally bound to the object or person. And the public key(s) are used for its annotations on the blockchain, similar to how Bitcoin works.

Suppose an arbitrary object, for example an apple. This all means:
1) Biunivocally assign a private key to the apple. This is the real challenge is item #1: how to assign private keys (or IDs) to things, and ultimately to people.
2) Generate public keys (tokens) from the private key in such a way that you cannot reconstruct the private key of the apple from its tokens, but you can check if a given token represents our apple.

Merging the physical and the technological world

Until now, mankind has lived between two separate worlds. The one of its own 3D physical reality, and the technological one we have has created for ourselves, of which the Internet and metaverses are the clearest exponent.

The essence of the “Fourth Industrial Revolution” involves the technological fusion of these two worlds into one, through the tokenization of objects and people.

This involves biometric keys assigned mechanically (chips), or biotechnologically (through genetic alteration of individuals).