Experimental Transactions Test Crypto Limits

A Russian state-owned fund is trying to attract investment to the tundra and swamps of Siberia through a digital token sale backed by Siberian diamonds.

According to The Financial Times, the plan will start a trial this month, where investors can buy a share in a diamond for as little as $10. If all goes well, future token sales will include the region’s forests, gas and gold, as well as its fresh water and fish.

“We think we have several trillion dollars’ worth of valuables in Russia’s far east” that could someday be tokenized, said Alexei Chekunkov, chief executive of the Far East Development Fund, an investment arm of Russian state development bank Vnesheconombank.

The assets are traded via digital tokens on online exchanges through bitcoin technology, where investors receive a digital receipt for their holdings. The price and ownership of the asset are also recorded on a ledger that cannot be tampered with, so the transactions are secure.

“Asset-backed tokens, for diamonds or Venezuela’s petroleum, are exploring the conceptual space of what’s possible with blockchain,” said Lex Sokolin, global director of FinTech strategy for London-based Autonomous Research. “They are a rudimentary first step.”

The diamond sale is similar to test projects such as a gold-backed token in Malaysia called HelloGold, and one launched by the Venezuelan government in February that tokenized some of its petroleum reserves into “petro” coins.

While the petro coins were banned in the United States, earlier this year Venezuela announced that it had reportedly sold $735 million of its cryptocurrency during day one of its presale. However, the country’s President, Nicolas Maduro, did not present evidence backing up that figure.

He did say “petro” could be used for tourism, gasoline or oil transactions, and he has been touting the cryptocurrency: “Today, a cryptocurrency is being born that can take on Superman,” he said in an announcement.



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