what is asset tokenization?
Asset tokenization is the process of digitizing tangible or intangible assets and converting them into tokens, which are stored on a blockchain.
One asset can be broken down into many smaller parts, allowing for fractional
ownership of the asset.
benefits of tokenization
Greater liquidity and accessibility
The decentralized nature of blockchain technology allows people from all over the world to buy and sell assets such as real estate, art or private company shares, that were previously not accessible outside their local markets.
Fractional Ownership
An asset can be split into as many parts as needed, granting the ability of partial ownership. This attracts a larger number of investors, provides much better liquidity and democratizes access to investments that were previously inaccessible.
Transparency
All transactions that take place on a public blockchain are available for all its participants to see. Investors can trace the entire history of trading for a particular asset and verify its current ownership.
Cost savings
Storing assets on the blockchain allows for buyers and sellers to interact directly with each other, eliminating the involvement of intermediaries and reducing the costs of third party services that were previously priced in the cost of the transaction.
Speed
Thanks to blockchain technology, an asset transaction that could usually take up to many days can now be completed in just a few seconds.
Financial instruments
Shares of publicly traded companies are being tokenized and fractionalized, allowing for example to own 1/10th of a share of Amazon. This also allows for 24/7 trading from anywhere in the world. Shares of privately held companies, previously unavailable to many potential investors, can also be tokenized and made available for trading.
Real State
Tokenization of real estate is unlocking many new investment opportunities, increasing liquidity and opening the market to a larger number of investors.
Commodities
Tokenizing precious metals, such as gold and silver, allows Investors to directly purchase the rights to real assets that are stored securely in vaults, also eliminating third parties and lowering transaction costs.
Art
Tokenization of art, such as paintings and sculptures, makes art more accessible to retail investors, and also helps artists who can now tokenize their works and sell them all over the world, without need for intermediaries.
Are you looking for tokenization opportunities for your business? Feel free to contact us.
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