IOTA will introduce support for tokenized assets through a new framework based on colored coins.
IOTA is committed to tokenization
IOTA is taking action towards NFT and other tokenized assets. A new feature known as Digital Assets Framework hopes to allow developers to issue new tokens. The team’s update announcement includes a specific reference to the NFT.
The new framework will allow the issuance of tokens through an innovation known as colored coins. It is a method of embedding data in coins on a UTXO-based blockchain. Colored coins were first introduced for Bitcoin many years ago to emit real assets on the blockchain.
For IOTA, this feature was enabled by the UTXO model initiated in Chrysalis Phase 2 Update. The project team said:
With IOTA Digital Assets, we are laying the foundations for asset exchange between networks with IOTA acting as a bridge currency at no charge.
IOTA also shared the update on Twitter, citing “the biggest update in IOTA history.”
The biggest upgrade in #IOTA‘S history will bring exciting new possibilities. With the #DigitalAssets Framework on IOTA, you can tokenize any asset with the same level of security, scalability and (no) fees as the IOTA token. https://t.co/DI1TC0cPt2#tokenization pic.twitter.com/iJZKk7Zr2l
– IOTA (@iota) February 18, 2021
NFT to IOTA
The project team says that using the Digital Assets Framework to issue assets with colored coins would also create a bridge with other cryptocurrencies. In addition, colored coins on IOTA would advance the ability to create non-exchangeable tokens (NFT) on the web. In one GitHub post, IOTA wrote:
Color is a globally unique property of a minted token, therefore, if there is only one token ever minted with that particular color, it becomes NFT.
The team will be implementing the framework during the Chrysalis migration in March, the most extensive update in the history of the project.
The move towards tokenized assets such as NFT was undoubtedly inspired by one of the leading cryptocurrency projects – Ethereum.