The Government of Colombia’s National Mining Agency (Agencia Nacional de Minería) has officially transferred its first mining title, minted as a non-fungible token (NFT) on the GoChain public blockchain, to Carbomas SAS, a leading mining company in Colombia.
Since revealing its blockchain plans at the Dubai World Expo in 2021, the ANM’s on-chain transfer event represents another key milestone for Colombia’s mining sector; and more broadly, sets the stage for mining and mineral titles around the world to take advantage of web3 technology.
The agency utilized Chainparency’s asset tokenization platform to mint and transfer the title.
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Blockchain Titles: Benefits
Minting mining titles on blockchain has many benefits for the agency including increased transparency, efficiencies and real-time digital authentication of title transfer and ownership; and opens the door to other significant benefits including financial innovation opportunities, i.e. blockchain-based crowdfunding.
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Having mining titles on a public ledger enables anyone to easily verify title ownership. While all titles are public record, the current process to authenticate, obtain, and / or verify ownership has historically been inefficient and overly bureaucratic; requiring a lot of manual work from both the person requesting the title and the agency to produce the information.
In addition to increased transparency, having a title on a blockchain provides an additional layer of security and integrity. Any transaction on-chain is time-stamped, cryptographically secured, and irreversible — any attempt to digitally alter or manipulate a mining title would not only be incredibly difficult but also instantly forensically discoverable. With the new web3 system, the agency is able to officially complete a mining title transfer by simply conducting a blockchain transaction, which results in the transfer of a NFT mining title from the ANM’s wallet to the digital wallet of the approved mining company.
In addition to NFTs, Chainparency’s “Tokenizer” asset tokenization platform also enables the issuance of fungible tokens tied to the non-fungible token, which mining enterprises and other ventures can utilize as a digital representation of pro rata equity ownership or interest in physical or digital assets. Tokenized equity not only results in making typically illiquid assets liquid, but also sets the stage for novel crowdfunding opportunities, which the ANM hopes will provide Colombian citizens the opportunities to invest in and have some level of ownership in Colombia’s strategic mining areas.
Tokenized Ownership
Once the transfer of all titles are completed, the next phase of ANM’s vision will be to enable mining companies with approved titles to more easily raise funds locally and globally via the issuance of tokenized equity- or royalty-based tokens. In this case, the mining company could raise capital via a tokenized crowdfunding process. The monies raised would be used to explore, mine, and extract metals and minerals. Eventually, once the mines start producing, the investors (token holders) could receive royalty distributions based on the blockchain-verified pro-rata ownership or number of tokens in an investor’s digital wallet.
At the moment, the typical process for a mining company to raise capital is not only time consuming but also generally exclusive to high net worth investors and corporations. The envisioned new way of tokenized crowdfunding can have a profound impact on both the process and timeline (speed) for raising capital. As important, tokenized crowdfunding will enable investors of all sizes and backgrounds to invest in new asset classes that were previously out of reach except for the most wealthy and privileged. Chainparency is proud to work with organizations like ANM, which are working to not only democratize access to but also to exponentially improve the process and ease to invest in previously unattainable asset classes.
Beyond mines, almost any digital or physical asset can be tokenized. For instance, depending on jurisdiction and local regulations, real estate or even non-physical entities like a company may be able to be tokenized. For real estate, the land title would be minted as an unique token or NFT while ownership could be represented via fungible tokens. For example, ownership in an apartment building or a commercial building could be represented with tokens and rent payments could be distributed to investors based on pro rata ownership of fungible tokens. In fact, any equity ownership in an enterprise could simply be based on tokenized equity shares — resulting in an open and real-time cap table, which is real-time verifiable on the blockchain. Finally, customers can take advantage of a built in secondary market as all tokenized ownership interests are highly liquid and easily transferable among digital wallets. Rather than having equity interests locked up for years, token holders can simply sell their interest and easily transfer tokens to any buyer.
Chainparency’s Asset Tokenization Platform
Chainparency’s “Tokenizer” asset tokenization platform provides enterprises, governments, and individuals with exceptional opportunities to harness blockchain technology and to uniquely benefit from digital tokenized solutions. Our platform provides a variety of service offerings to include responsible minting and issuance of digital tokens (fungible and non-fungible), tokenized asset discovery, procurement, and transference of ownership, digital wallets and identity solutions to facilitate transfer and ownership of tokens and lastly the platform provides the ability to crowdfund and buy and sell tokens in a secure integrated experience.
Blockchain-based tokens function as “digital twins” of real-world tangible and intangible assets; and help to unlock value and provide unparalleled transparency for global commerce, finance, and supply chains. The use of blockchain-based tokens along with digital wallets ultimately ensures that any asset sale or transference of ownership can be easily verified, immutably recorded, and real-time auditable via a cryptographically secure, distributed public ledger.
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