How are assets tokenised?
There is a number of ways of adding assets to the blockchain and a number of types of tokens for different purposes.
Security Tokens: the tokens of this type are tradable and regulated tokens allowing the investors to hold a digital representation of equity shares or assets and to receive anticipated dividends/profit shares, as well as appreciation. The value of a security token is derived from the assets behind it. Below are the types of security tokens.
Debt tokens: a type of security tokens that allow the issuer to put assets as collateral and obtain liquidity against it. The asset is frozen on blockchain until the obtained money is returned. The only downside is that security tokens are bound to be regulated, which, on the other hand, makes them more secure and very attractive for institutional investors.
Equity Tokens: another way to tokenize a business is by issuing equity tokens, whereby the shares of a company are represented by blockchain tokens. This model is similar to the conventional company shares. The gold miner from the above example may decide to issue 10 tokens, each representing a portion of the equity in his mining business to be held by 10 investors, contributing $500,000 each. With the generated $5 million the miner buys new lands and equipment, which increases his production volume. With the growth of the business, the value of the tokens grows, too.
Profit-Share and Cash Flow Tokens: in this scenario, the gold miner issues 10 tokens, each one representing a certain percentage of profits of the business. The token holders will receive part of the profits of the business. These tokens do not increase in value when the overall value of the business increases.
Real Asset Tokens: ownership of real-world assets, such as gold or real estate is represented by these tokens. The blockchain allows us to eliminate complicated processes, trust issues and simplify transactions. Keeping track of records, logistics, is possible in a safe and transparent way. It is possible to use these tokens as tradable coins, as they are backed by the stable real-world value of commodities.
Digital Commodities Asset Exchange in the Middle East, focusing on tokenised commodities. Licensed and Regulated. Tokenisation advisory.