Method for creating commodity assets from unrefined commodity reserves utilizing blockchain and distributed ledger technology

A cryptographic tokenization method of a productive asset which produces a commodity, comprising:

• collateralizing a property interest in the productive asset under a secured transaction with a security interest requiring delivery of substitute collateral representing an amount of the commodity at the expiration of a term for outstanding interests in the secured transaction;
• producing a plurality of cryptographic tokens, each cryptographic token comprising a cryptographic data structure-representing a portion of the outstanding interests, represented on a blockchain system which tracks cryptographic token transfers and authenticates current cryptographic token ownership,
• wherein the blockchain system supports automatic execution of a distributed virtual machine instantiated across a plurality of network nodes that executes a smart contract that implements the security interest, the smart contract having as inputs at least time, current cryptographic token ownership, and substitute collateral status, and having as an output at least an immutable indicator recorded on the blockchain, the smart contract comprising instructions operating to determine a failure of satisfaction of terms of the secured transaction, and upon said determination, to authorize operation of the productive asset to fulfill obligations under the secured transaction;
• transacting changes in ownership of the plurality of cryptographic tokens on a market using the blockchain;
• and
• automatically determining by the smart contract, a tolling contingency for expiration of the term, and a failure of delivery of the substitute collateral to an outstanding cryptographic token holder upon expiration of the term.

A cryptographic tokenization system, comprising:

• a distributed ledger system comprising a plurality of nodes which together execute a fault tolerant distributed consensus system, which supports transactions in a market using tokens comprising cryptographic data structures, the distributed ledger system being configured to authenticate a current owner of a token, block an inconsistent transfer of the token, and provide an immutable record of token transfers, and supports execution of a distributed state machine for execution of a smart contract;
• each token representing a portion of a secured transaction secured by collateral representing a property interest in a productive asset, under a security agreement requiring tender of substitute collateral at the end of a term for outstanding interests in the secured transaction to relinquish the collateral;
• the smart contract being automatically executed by the distributed state machine, having as inputs at least time, an ownership status of the plurality of tokens, and a substitute collateral status with respect to the plurality of tokens, and having as an output an indicator that permits operation of the productive asset on behalf of outstanding interests to fulfill obligations of the secured transaction;
• and
• the distributed ledger system being configured to transact changes in ownership of the token using the distributed ledger system.