There are many things or assets that are inherently digital and can be represented in a digital manner. We can see these categories in the following diagram:

This category includes a huge number of things that have an opportunity to be decentralized, which are as follows:

• Real-world currencies
• Bonds
• Stocks
• Debentures and other such assets

Let's look at these assets and how they can be decentralized by taking an example. Let's say one colored coin represents one particular currency and the other colored coins represent the stock of a particular company. Now, all these assets can be transferred between different participants. Let's say that one participant transfers assets such as bonds or stocks to the other participant, while the other participant pays currency against those assets being transferred to them. This trading of assets can very well be decentralized. You can have atomicity between trading of these assets and transfer the money together, just to make sure that the transfer of assets and the transfer of money takes place at the same time, making one complete transaction.

However, all this is easy to achieve with a solution to a fundamental challenge, that is, how do you ensure that 1 dollar in a colored coin is actually worth 1 dollar? This can be achieved when a bank or a consortium of banks agree that they will bank this colored coin of 1 dollar and that they will maintain the ratio. So, this entity will have to ensure that this one-to-one ratio is being maintained throughout. Similarly, the entity that repossesses the digital stocks must ensure that the digital stock is equivalent to the physical stock. They need to get an agreement to keep this ratio maintained.