Solitaire Tokens Backed by Physical Assets
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Solution Overview
Problem
Non-fungible tokens (NFTs) experience volatility due to market demand fluctuations, making them a risky investment, and existing technologies lack mechanisms for stable value retention and flexible exchange options.
Innovation Solution
A platform that facilitates the creation, sale, modification, and exchange of solitaire tokens (ST) backed by physical assets and/or digital currency, using smart contracts to manage and secure these assets, allowing users to create, sell, modify, and exchange ST tokens while ensuring asset retrieval upon token destruction.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If NFTs are used as digital assets, then digital ownership and transfer capability is achieved, but value stability and investment security deteriorate due to market demand fluctuations
Solution Approach 1:
The patent introduces a backing component as an intermediary between the NFT and its value representation. This backing component (physical asset or digital currency) acts as a mediator that provides stable value while the NFT maintains its digital ownership functionality. The smart contract links the NFT to the backing component, allowing the NFT to benefit from both digital versatility and tangible value stability.
Solution Approach 2:
The patent creates a composite structure where the NFT is combined with a backing component to form a hybrid asset. This composite structure integrates the digital ownership capabilities of NFTs with the value stability of physical assets or established digital currencies, resulting in a new asset class that exhibits properties of both components.
2Reliability
If backing components are linked to NFTs via smart contracts, then value stability is improved, but system complexity increases
Solution Approach 1:
The smart contract automatically manages the linkage between NFTs and backing components without requiring manual intervention. The system self-services by automatically enforcing the rules of association, handling transfers, and maintaining the integrity of the backing component links, thereby reducing operational complexity despite the increased structural complexity.
Solution Approach 2:
The smart contract serves multiple functions: it links NFTs to backing components, manages transfers of both digital and tangible assets, enforces ownership rules, and maintains the integrity of the hybrid asset structure. This multi-functionality consolidates what would otherwise require multiple separate systems into a single unified mechanism.
3Reliability
If physical assets are used as backing components, then value retention is improved, but ease of transfer and exchange deteriorates
Solution Approach 1:
The patent creates a digital representation (the NFT) that copies or represents the physical backing asset. This digital copy can be transferred, traded, and exchanged easily through blockchain technology, while the actual physical asset remains stationary. The NFT serves as a portable proxy for the physical asset, enabling convenient transfer without moving the physical object itself.
Solution Approach 2:
The patent separates the physical asset from its ownership representation. The physical asset (backing component) remains in secure storage, while the ownership rights are segmented into a digital NFT that can be freely transferred. This segmentation allows the physical asset to maintain its value retention properties while the digital representation provides transfer convenience.
Data Source
AI summary
Embodiments of the present disclosure provide methods, systems, and computer program products that facilitate the creation, sale, transfer, and exchange of tokens with a backing component on a platform. The method includes obtaining a digital asset for conversion to a token. The digital asset is a non-fungible token (NFT). The method also includes collecting a backing component for the digital asset and creating a smart contract associated with the digital asset. The smart contract links the backing component for the digital asset. The method further includes generating the token via tokenization of the digital asset and the smart contract. Embodiments of the disclosure include token that include backing components that are physical assets and banking mechanisms that are retrievable when predetermined criteria are achieved.