InterWork Alliance tokenization standards
Technology

Business, blockchain firms push token standards

The InterWork Alliance says uniformity is badly needed if asset tokenization is going to achieve its potential and disrupt the global economy

Big names including ING, Microsoft, and Nasdaq have joined forces with blockchain leaders like Hedera Hashgraph, Neo, and Hyperledger in a new alliance that aims to create global standards for tokenizing real-world assets.

InterWork Alliance tokenization standards
IWA chairman Ron Resnick (Photo: IWA)

The new InterWork Alliance (IWA) believes that distributed applications, or DApps, that run on blockchains “have the potential to disrupt global economics,” the organization said in a release

But, it added, “the wide-scale availability of different platform types has stalled web-scale adoption of tokenized assets. What is required is standardization at the business level, which would allow companies to be able to agree on distributed business models without choosing a platform first.”

Even so, tokens are already being used to digitize and transfer items of value in a wide range of industries, ranging from artwork and properties to loyalty points and stock shares, the IWA noted. 

Making a bigger impact

Changes to the status quo are badly needed according to IWA president Ron Resnick, who formerly served as executive director of another industry standards body, the Enterprise Ethereum Alliance.

InterWork Alliance tokenization standards
IBM Digital Assets Lab director Nitin Gaur (Photo: LinkedIn)

 A “proven, standard approach” to tokenization is needed to build trust in this burgeoning industry if it is to have any chance of making a large, lasting impact, he argued. At present, dozens of different platforms are competing for attention—overwhelming businesses and preventing tokenization from disrupting global economics.

“Companies want to be able to create token-based business models without having a platform technology in mind,” Resnick explained. “For this approach to work, standards are urgently needed around defining what a token is and how its contractual behaviors will work. The Alliance was created to serve as the organization where this essential work happens.”

“A platform-neutral alliance is critical for the entire industry,” agreed Nitin Gaur, director of IBM WW Digital Asset Labs, a founding IWA member. Open industry standards are vital “to help organizations build the token networks of tomorrow,” he added.

“The InterWork Alliance offers a way to classify tokens and contracts using a common language to describe them,” Gaur said. “The Alliance will help establish a foundation not only for technology and business but for the changing tokenization landscape as well.”

E pluribus unum

A platform-neutral forum is critical to making this happen, added Marley Gray, a principal architect at Microsoft and the InterWork Alliance’s chairman. 

InterWork Alliance tokenization standards
IWA Chairman Marley Gray (Photo: IWA)

“Technology-agnostic tokens and contract definitions” would let firms “foster interoperability and drive widespread adoption,” Gray said. 

By letting firms “focus on business outcomes rather than technology implementation details,” these definitions would be as beneficial to a company focused on unlocking efficiencies in the carbon market as they would a financial trading platform.

In time, the IWA’s aim is to offer frameworks that allow businesses to create standardized token definitions and contracts in “non-technical business terms.”

The Alliance also made an important point: its goal isn’t whittling down the number of blockchains and tokenization platforms out there, but ensuring they are all singing off the same hymn sheet, irrespective of their unique selling points. After all, banks have points of difference, but they all tend to adhere to the same principles.

Three frameworks

In order to build a solid framework for tokenization, the IWA is focusing on three main areas. First, providing a common language so multiple parties can agree on the definition of a token. Second, creating standardized clauses that allow businesses to compose multi-party contracts that are interoperable and recognized globally.

The third, which will likely require a deft touch in the privacy-centric blockchain industry, is creating a set of rules enabling organizations to analyze multi-party contracts and share data without violating participants’ privacy. This is needed in order to take advantage of “value-add AI services and market-driven data reporting,” the IWA said.

To cut the jargon, this means looking past the individual use cases of tokenization to find and codify the attributes that they all have in common, and ensuring competing platforms are interoperable. From there, tokenized systems could become a lot less mysterious to individuals, businesses, and regulators alike.

Mark Radcliffe, co-chair of global law firm DLA Piper’s blockchain and digital asset practice said that collaborative frameworks “developed and managed by industry organizations such as the InterWork Alliance will be critical to the success of tokenization just as the Linux Foundation and the Apache Software Foundation have been critical to the success of open-source software.”

 You May Also Like

Connor Sephton is a journalist with an interest in cryptocurrencies, personal finance, and financial inclusion—as well as the challenges the crypto industry faces in achieving mainstream adoption. He owns cryptocurrencies.