Can tokenization prevent ‘double-pledging’?

Homepage > News > Business > Can tokenization prevent ‘double-pledging’? TL;DR: Tokenization can make ownership and transfers easier to track, but collateral creates another problem. Lenders need to know not only who owns an asset but whether somebody else already has a claim on it. As tokenized assets become more widely used as collateral, pledges, liens, releases, and other encumbrances will need to become part of the asset’s live digital state. Shared, scalable ledgers could make those claims easier for different institutions to verify. Key takeaways: Tokenization can provide a shared record of ownership and transfers, but ownership does not reveal every claim attached to an asset. Double-pledging occurs when the same underlying asset is used to secure more than one obligation without the relevant lenders being aware. Tokenized collateral needs to record encumbrances such as pledges, releases, priority, and permitted use. Fragmented ledgers make this harder because different systems may hold different records relating to the same underlying asset. A shared, scalable ledger could give lenders a common record of an asset’s current state and the claims attached to it. Bitc...