This week we explored the concept of Tokenization. Three important protocols discussed were Secure Multi-Party Computation (SMPC), Policy-Backed Token (PBT), and Open Asset Protocol (OAP). Compare and contrast these three protocols and explain which industries can benefit the most from each of these protocols.
Please make your initial post and two response posts substantive. A substantive post will do at least two of the following:
- Ask an interesting, thoughtful question pertaining to the topic
- Answer a question (in detail) posted by another student or the instructor
- Provide extensive additional information on the topic
- Explain, define, or analyze the topic in detail
- Share an applicable personal experience
- Provide an outside source that applies to the topic, along with additional information about the topic or the source (please cite properly in APA)
- Make an argument concerning the topic.
I have to start this post by saying that the article for this assignment by Li et al. (2019) is poorly written. It has many issues such as grammar errors and misused words making it difficult to read and comprehend. In addition, there is very little information about the proposed protocols in the article available, both peer-reviewed and non-peer-reviewed.
The Open Asset Protocol (OAP) is a proposed method to attempt to tokenize assets to provide liquidity to those assets using blockchain technology (Li et al., 2019). Tokens are a representation of the assets and provide a way to sell and trade shares of ownership in the assets. An implementation of OAP is the Policy-Backed Token (PBT), which is for the insurance industry. This does not make much sense since the only type of insurance that can be considered an asset is life insurance. But the article uses travel insurance scenarios for luggage and delays as examples.
An important aspect in tokenization is the preservation of privacy. One protocol reviewed by Li et al. (2019) is Secure Multi-Party Computation (SMPC). SMPC is a protocol that has been around for a long time. It is based on cryptography and allows multiple users to engage in distributed computing and provide inputs into functions or methods allowing them to maintain their privacy and hide their inputs and results (Zhou et al., 2021). Li et al. (2019) propose using OAP for tokenization instead of SMPC. The SMPC protocol would require a client installation that OAP does not require. Additionally, it is proposed that OAC has cost and efficiency benefits over SMPC.
It will be interesting to see if the proposed OAC protocol reaps the described benefits. We will not know until it is implemented in real-world situations.
Li, X., Wu, X., Pei, X., & Yao, Z. (2019). Tokenization: Open asset protocol on Blockchain. 2019 IEEE 2nd International Conference on Information and Computer Technologies (ICICT). https://doi.org/10.1109/infoct.2019.8711021
Zhou, J., Feng, Y., Wang, Z., & Guo, D. (2021). Using Secure Multi-Party Computation to Protect Privacy on a Permissioned Blockchain. Sensors, 21(4), 1540. doi:10.3390/s21041540