New Group, ERC3643 Association, Aims to Simplify Tokenization Through Standardization

Have you ever wished you could own a small part of an expensive artwork or a piece of real estate?  That's what tokenization is all about.  It's a way of taking something valuable and dividing it into digital pieces, or ‘tokens', which can be bought and sold online.  A new organization that has just been announced, the ERC3643 Association, has been set up by leaders in various industries to make this process easier and more standardized.

Founding Members and Their Goals

Upon launch, the ERC3643 Association is comprised of the following companies.

This group's mission is to popularize the use of the ERC3643 standard.  Imagine this standard as a common language that allows these digital tokens to be created, traded, and managed smoothly and securely across different platforms.  The ERC3643 Association notes that beyond standardization, it plans on operating with three main objectives in mind.

1. ‘Providing developers with the tools and resources they need to deploy the smart contract easily'
2. ‘Educating the market to dispel misconceptions about the risks of using open networks for tokenization'
3. Promoting best practices, ethical behavior, and professionalism within the industry'

Just like how every car follows basic design principles to fit on the same roads, this standard ensures that all digital tokens can interact seamlessly in the online world.  It is especially important because tokenization has been growing rapidly in recent years due to its ability to enable quick, secure, and clear online transactions.

Among the founders of the ERC3643 Association are established companies, startups, and key people who are affected by this trend.  Each wants to shape an online economy that is easy to use, safe, and open to everyone.

This move comes at a crucial time in which an increased spotlight is being placed on tokenization efforts.  Just look towards Luxembourg, where there has already been a rapid evolution of regulations pertaining to digital securities.  In the European nation, Digital Ledger Technology (DLT), the same technology which underpins tokenization, is being used to revolutionize how ownership of things like company shares is registered and transferred.  With the ERC3643 Association’s efforts, these digital changes are set to become even more streamlined and user-friendly.

Understanding ‘Token Standards' and their Role in Digital Securities

A ‘Token Standard' can be thought of as a set of rules or guidelines, which are agreed upon and followed when creating new tokens on a blockchain.  These rules define how these tokens can be transferred, how transactions are approved, how users can access data about a token, and other key interactions.  By following a specific token standard, developers ensure that their new tokens will work within the larger ecosystem, and can interact with other tokens and platforms that follow the same standard.

In the case of digital securities – which are digital assets that represent ownership in real-world assets like real estate, companies, or even artworks – there are several popular token standards.  These standards add additional rules to handle the complex legal and regulatory requirements for these types of assets.

Here are some of the most common token standards used for digital securities:

1. ERC20: The most common standard for creating tokens on the Ethereum blockchain, including many security tokens.
2. ERC721: Known as the standard for Non-Fungible Tokens (NFTs), these tokens represent unique assets.
3. ERC1400: A standard specifically designed for security tokens.  It adds features to help manage complex rules about who can own and trade these tokens.
4. ERC3643: The newest standard, as discussed above, aims to streamline and standardize the creation and management of digital tokens.
5. ST-20 (Polymath): A standard from the Polymath platform, designed for regulatory compliance in security tokens.
6. DS Protocol (Securitize): A standard from the Securitize platform, providing lifecycle management for digital securities.
7. R-Token (Harbor): A standard by Harbor that checks all token transfers for compliance with regulatory rules.

By creating a common ‘language' or protocol, these token standards allow different applications, tokens, and platforms to interact with each other seamlessly, creating a more interconnected and efficient digital economy.

If the ERC3643 Association is successful in its goal, it will see its ERC3643 standard adopted across the board, making interoperability concerns a thing of the past, paving a smooth road forward for future growth in the digital securities sector.