Did Ravencoin solve the “securities on the blockchain” problem? Let’s dig in

Ravencoin, a blockchain especially designed to issue fully compliant securities is a phenomenal idea

Did Ravencoin solve the “securities on the blockchain” problem? Let’s dig in

You have to give it to Ravencoin, a blockchain especially designed to issue fully compliant securities is a phenomenal idea. However, that doesn’t necessarily mean it’ll be successful. The Ravencoin team is up against some of the biggest names in crypto, other smart-contract-focused L1s include Ethereum, Solana, and Cardano to name just a few. And then there’s Polygon, the much cheaper side chain that keeps generating headlines

Does the Ravencoin project have what it takes to face all of those platforms and come out on top? That’s what we’re here to find out. A distinction has to be made, however. While Ethereum and Polygon are general platforms where you could virtually do anything, Ravencoin is a special blockchain dedicated to  securitizing assets or digitizing assets.

What is Ravencoin and what does it do?

Ravencoin is a fork of bitcoin, but its carefully crafted customization might be the secret ingredient that the securities market needs to finally merge with blockchain technology. The team set out to build an extremely transparent chain that every government will have access to. And Ravencoin also built tools for issuers to have an easier time complying with securities laws and communicating with their investors. If they’re successful, this blockchain might lead to mass adoption of securitized tokens (STOs), with transparent regulations and rules from governments.

They’re not waiting for that to happen, though. Ravencoin is already issuing security tokens like there’s no tomorrow. Tron Black, Ravencoin’s lead developer, explains:   

“An STO is a legal issuance of securities on the blockchain. STOs are like the ICOs of 2017, but they are issued under the legal framework of — and compliant with — the securities laws. In the U.S., specifically the Securities Act of 1933.”

The blockchain’s native token is the RVN, and one of its special characteristics is that you can reissue them as securities, essentially, to anything that you're tokenizing. That’s right, using Ravencoin you can tokenize any real world asset. Real estate is only one of the use cases for this revolutionary technology. In this interview, Tron Black explained the burning mechanism that makes the whole system tend toward deflation:

“You have to burn 500 RVN in order to create an asset — so that’s burned; it’s gone; it’s probably burned to address with no private key. So, each asset of the 22,000 or 23,000 that have been issued so far has gotten rid of 500 RVN forever.”

Other differences from bitcoin are that the total supply will be 21 billion with a “B”, the block reward is currently 5000 RVN, and the blocks run at one every minute.

Ravencoin’s main characteristics 

Before we get to the customization, let’s explore some facts about the project. The quotes come from the Ravencoin whitepaper.

  • The code is free and open source.
  • This one is important, “There is no private, public, founder, or developer allocation set aside.”
  • In fact, they didn’t pre-mine or raise funds to build Ravencoin.
  • The blockchain “is intended to prioritize security, user control, privacy, and censorship resistance.” In this case, privacy means that Ravencoin will only give the authorities the required information and nothing more.
  • The platform’s interface is easy to use. If everything else is set up, issuing a token should only take a few minutes. 
  • Even though RVN needs to be mined, tokens deployed on the Ravencoin blockchain don’t require mining. “Users of the Raven protocol create these assets and decide their purpose and rules independent of the protocol.”
  • Customization is paramount to them, “the issuer determines the quantity issued, the number of decimal places, and whether they will be allowed to issue more of the same token in the future.”
  • The issuer sets the rules, “the tokens can be made either unique, limited, or fungible.” That means that “project managers will be able to have categories of token holders such as “Class A Shareholders”, “Lifetime social club members”, “Benefactors,” etc.”

Exclusive Ravencoin tools

  • Issuers set the rules and those rules can change over time. When the project reaches certain milestones, the code can remove or add requirements. 
  • Restricted Assets refer to the tokenized assets deployed on Ravencoin. Tags allow you to separate the wheat from the chaff. Issuers can set them up and the code specifies that only properly-tagged people can access certain Restricted Assets. According to Tron Black, “Tagging can be used for things like KYC, Accreditation, Affiliation, and limits on the number of addresses that can hold tokens.”
  • Issuers can also tag notes to an asset deployed in Ravencoin, which can be useful. 
  • Another superpower, issuers have the tools to freeze assets whenever the government demands it necessary. The government has to send a legal document for them to do so, though. About this, Tron Black clarifies, “This is a compliance requirement. Another use for these features is for Rule 144 restricted stock.”
  • The platform offers an internal mechanism for KYC/ AML procedures. Every project deployed on their blockchain can rely on it. Quoting Tron Black once again, “Combining the Tag feature of Ravencoin with a very trustworthy KYC provider (e.g. Finclusive) that will tag Ravencoin addresses with a special tag (#KYC_F) indicating that KYC information is securely stored and the appropriate databases have been checked.” 
  • Ravencoin also offers an automated payment system. According to the whitepaper, it allows “the payment of rewards (or dividends) in the native token. With a single command the reward, denominated in RVN, is automatically divided evenly and sent pro-rata to the holders of the asset.”
  • Another huge feature is the messaging system for keeping investors informed. The traditional system has massive communication problems and can’t compete with this. According to the whitepaper, “This must be handled very carefully because the token holders do not always wish to be identified. The communication should allow the token holder to opt-out at any time. Messaging to token holders by authorized senders will be layered on top of the unique assets.”
  • The messaging system opens the door for all kinds of voting events. If we’re talking about an equity token or any other that guarantees voting rights, token holders will be notified via messages, and “the vote can be automated from the client or through a web or mobile interface using the protocol built into Ravencoin.” 

What can the tokens represent?

According to the official site, the tokens can “be issued as securities or as collectibles.” What can you do with them, though? These are just examples and the basic use cases, Ravencoin-issued security tokens can represent: 

  • Real-world physical or digital assets, such as real estate, gold or PAX Gold
  • Shares of a project or company
  • Credit.
  • Virtual goods. Think in-game items or NFTs.
  • The developers also promise, “Ravencoin will allow projects to issue tokens to represent co-ops, corporations or partnerships.”

Great Moments in Ravencoin History

Now that you got what you were looking for, i.e. the project’s special characteristics, it’s time for some history:
In October 2017, Bruce Fenton had the idea that led to Ravencoin. One of the people he spoke to was Overstock CEO Patrick Byrne, who liked the idea and sent some developers to work on the project. Of course, since it's a bitcoin fork, some of the code was already written. Nevertheless, they worked at record speed and deployed the blockchain in January 2018.

One of the main differences from bitcoin is that Ravencoin developed its own consensus mechanism. Since then, they’ve been constantly updating it to make it ASIC-resistant. For the uninitiated, ASICs are single-use machines specially designed to mine, most notably bitcoin. By making their consensus mechanism ASIC resistant, Ravencoin hopes to democratize the mining process and give the everyday man and his home computer access to it.

Time for conclusions

Asset tokenization is the future, that much is obvious to us. However, it's still very early in the game. We still have a few years for asset tokenization to become more of a thing. And if you’re like us, you like getting ahead of everything and then helping to build said future. That’s exactly what the Ravencoin project set out to do. Did they achieve their goal? They might have on the technological side, but there’s still a long way to go on the regulatory side. And that part is crucial to the whole enterprise. The Ravencoin team acknowledges this in the whitepaper:

“For such a global system to work it will need to be independent of regulatory jurisdictions. This is not due to ideological belief, but practicality: if the rails for blockchain asset transfer are not censorship resistant and jurisdiction agnostic, any given jurisdiction may conflict with another. In legacy systems, wealth was generally confined in the jurisdiction of the holder and therefore easy to control based on the policies of that jurisdiction.”

This could seem almost impossible for every other industry, but the security tokens business is just too good and the traditional system is just too slow. It’s time for innovation, and the interests of politicians, businessmen, and investors seem to be aligned for this to happen. And where there’s a will, there’s a way. 

The Ravencoin project is the private sector extending a hand to governments everywhere. The team is creating tools to make the whole process as easy as a few clicks and is trying to create a system that’s as compliant as humanly possible. On the other hand, they’re also creating tools for intrepid issuers to get ahead of regulation and tokenize assets to their hearts’ content. If all of those projects work as intended, if Ravencoin users become verified investors and can buy and sell tokens with a few clicks, and if a borderless trading ecosystem is the result of their gamble, this project may change the world. 

Buy/ No buy recommendation

We definitely recommend considering Ravencoin for your asset tokenization needs. However, we can’t say the same about the RVN token because we haven’t analyzed it yet. The token itself wasn’t under this article’s purview.

About SmartBlocks

Mark Fidelman

Here at SmartBlocks, we believe it’s time to democratize currency and make it available to anyone, anywhere, anytime.