Asset Tokenization: the Next Investment Wave of 2020
By Scott Macy on The Capital
From art to real estate, asset tokenization is set to change the way we invest in assets. Those who are not prepared to adapt to emerging technology are risk being left behind. The tokenization of assets opened the door to fair financial practices with less friction in buying and selling of the securities.
In this article, you will learn what is tokenization, its benefits and top tokenization platforms in the industry.
What is Tokenization?
Asset tokenization refers to the process of issuing blockchain tokens which digitally represents the actual tradable assets like property, art or any precious metal. These tokens are quite similar to traditional security tokens. Tokenization is applied in equities, bonds, and other illiquid assets.
These digital tokens give limited ownership of the particular real estate asset or share in a company to the investors. These tokens can be traded on a secondary market in exchange for fiat currency or cryptocurrency.
Tokenization is beneficial for both investors and sellers. It offers higher liquidity, cheaper transaction facility, transparency and greater accessibility to the global market. Let’s see each one in detail.
Liquidity:
Investors of the tokenized assets can choose to trade the tokens in the secondary market for liquidating the asset in the asset tokenization platform. This opens the market for more investment opportunities and gives the benefit of the liquidity premium based on the accumulated value from the underlying asset.
Faster & Cheaper Transactional Facility:
Automation of transactions with smart contracts (It is a pre-defined set guideline digitally executed) gives a greater advantage in executing the trade between the buyer and seller of the token at a much faster and cheaper rate.
Transparency:
The digital tokens hold all the required information inside the block and these blocks are immutable. This feature gives more credibility in a transaction and allowing you to know with whom you are dealing with.
Accessibility:
The digital asset tokens are highly divisible, it opens the door for all the small investors who can purchase an incredibly small percentage of the underlying assets. These things make the cryptocurrency and asset tokens highly accessible to everyone in the global investment market.
List of Asset Tokenization Platforms:
- Neufund
- Meridio
- Harbor
- Polymath Network
Conclusion:
The token economy has a huge potential to transform the financial institution structure from a centralized agency to an individual peer-to-peer network. Due to increased adaptation of digital payments, all our transaction details are stored by the third-party provider (government or private infrastructure) and this centralized structure has become an easy target for hackers. So, adapting to blockchain technology, the new entrant in this domain will increase credibility and efficiency.
If you want to be a frontrunner of this transformative technology and want to build a cyber-secure asset tokenization company, then Blockchain App Factory will be the right choice in building a white-label digital asset platform. Check out their website to know more.
