Documenting The Asset

Assets, whether tangible or intangible, can be documented for various reasons, and the impetus behind such documentation can differ.

- Process and reasons for documenting asset existence and ownership

Individual might want to document existence or ownership of the asset as a result of:

• Voluntary Documentation: For instance, a local government has a vested interest in documenting the natural resources it controls. Similarly, an individual who discovers valuable resources, like gold ore, may choose to document the find. While not mandatory, this documentation can establish ownership and is advisable if the finder intends to sell the resource, thereby avoiding penalties for not reporting income.

• Regulatory Requirement: Often, the obligation to document an asset arises from legal requirements. Regulations may dictate the recording of certain assets, like firearms or pets, in official registries. Additionally, assets such as apartments or other real estate must be documented for tax purposes.

• Using Creation by Documentation (Asset evocation): In certain instances, the act of documentation itself is what brings an asset into legal existence. This is the case for legal entities and other bodies that are recognized and become operational by the very act of their registration.

Note Evocation is one of the key limitations that hasn’t been properly addressed by existing RWA solutions (please refer to RWA tokenization - global issues to be solved) section for more details.

Let’s now move to the means of documenting the assets (i.e. what forms and data storages can be used to document both asset existence and asset ownership).

- Means of documenting asset existence and ownership

The classification mentioned serves as a reflection of the historical evolution in asset documentation practices, aligned with the advancements and availability of storage technology. Evidently, before digital data storage became both functional and widespread, paper-based records and archives were the predominant method for documenting information.

It is also insightful to examine the accessibility of these records, considering how they may be used and viewed both internally, within an organization, and externally, by other parties. The transition from paper to digital formats has significant implications for the ease of access, sharing, and security of asset records, affecting stakeholders' ability to interact with and utilize this information effectively.

- Records accessibility

The initial 4 mediums of documentation — paper archives, audio drives, physical images like photographs, and video drives — are inherently isolated from the World Wide Blockchain. This separation, while appearing as a limitation, can also confer an added layer of security, particularly in the context of physical data backups where protection from cyber threats is inherent.

Conversely, digital data drives have the capability to be either web-connected or standalone. Connected drives may serve as the proprietor's own storage system, such as an internal server where data is maintained in-house. Alternatively, they could be housed on external servers, utilizing third-party data storage services. The choice between these options can significantly impact data accessibility, security, and management, shaping how data is interacted with in the broader context of digital asset documentation.

Note It's important to note that the potential for public access to records is independent of whether they are connected to the web. Both web-connected and standalone records can be configured to be open to the public or kept private. This consideration is crucial when it comes to 'dynamic access restriction rules,' which are mechanisms that manage the levels of access granted to different users or under various conditions.

Finally, our last consideration will be related to different architectural types of data storage used to document asset existence and ownership , together with specific features of blockchain based infrastructure.

- Records architecture types

Note The key take-away from the above chart is that there is no one unified definition of digital data storage or blockchain infrastructure that can be universally applied, and furthermore - there’s no legal framework on how these records should look like, unless they are managed by the public authority. Other than this, the only regulations applicable to documenting private asset data on blockchains are data protection and privacy regulations, oriented rather towards specification fines for mismanagement of records and regulating means of compensation and data protection. While private blockchain owners (or worse - anonymous organizations) might publish documentation related to how it works and what are the rules of data storage, there is on guarantee that this won’t change in future (even in case of decentralized protocol, anonymous players might gain control over majority of tokens).