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“Asset Tokenization”- What is that?
It is hard to believe the fact that you can tokenize your asset for a partial sum of money you want. Yes, but it is true. Let me make it clear. Suppose, You need money, say, 5k USD and you are ready to sell your BMW bike that costs 17k USD, that seems plausible, right. Because you need only 5k USD. In that sense, even if it sold for 12k USD, you will be having 7kUSD in excess, that is unnecessary. With digital-based Asset tokenization, it is possible to get your precise need for money. Also, you can sell your asset without any sort of legal hassles and time constraints.
Yes, you heard it right. The asset tokenization platform is the digital tokenization of your assets. Here, you can create many levels of shares for your asset and get the money real quick, which is next to impossible by traditional measures. You can convert your 17k USD bike into 17k tokens which blockchain technology secures. If you want 5k USD, you can buy 5k shares of your bike after tokenizing. So you can get your desired money and your shares for your bike is secure too. So, it is a win-win situation.
Type of Assets for tokenizing:
There are two types of assets tokenized in the Asset Tokenization Platform – Fungible and non-Fungible assets. Fungible assets are those assets that are tangible. It includes the fiat currency, Jewelry, etc. They can get converted into tokens and stored in the blockchain. It relies upon the unit of accounts. Fungible assets transferred into tokens, because it does not need more complex information. That is necessary to store in the blockchain compared to the non-fungible asset. Non-fungible tokens combined with fungible tokens to create pricing. Most of the asset tokenization platforms prefer fungible tokens for their token creation sources. It is because the non-fungible assets do have some management challenges which becomes the entire system more complex. But, we know that non-fungible assets can also get tokenized with a secured tokenization platform.
Advantages of Asset tokenization:
Asset tokenization platforms work on the principle of facilitating the users' assets into liquid. It makes the transactions so smooth, reliable, and cozy. Some of the advantages of the tokenization is being discussed below:
1. Psychological and functional relief – High-end investment involves cautious actions. That create psychological and functional complications and risk. Asset tokenization is being conducted by blockchain technology. It creates relief for those users so that the transactions get done on a secure platform.
2. No territorial jurisdictions –Asset tokenization platform does not function like a Federal Bank. that sets up terms and jurisdictions. The platform is completely digital and you can transact from wherever you are. You can transact your assets in India into tokens somewhere in New York within minutes.
3. Zero Intervention or Intermediary: Except for the platform who is a guide; there is no more presence of third parties.
4. Lower risk -This is not a share market to consider the risk. The entire system get secured and encrypted off the threat to avoid theft.
5. Liquidity – This is one of the most important advantages of the tokenization platform. The asset which is difficult or impossible to liquidate can get done using this platform within minutes. The assets can get liquidated and ownership can get fractioned.
6. No regulations or limitations – As the system is not regulated by any central authority, there is no regulation or limitation in converting your asset to tokens in the platform. The one thing you should consider that you should check the reliability and the goodwill of the tokenization platform you are using.
Tracking your assets:
The asset tokenization platforms provide you with tracking facilities to manage and administer. The tracking features are programmed by the platform to facilitate both the issuer and the investor. Some of the features are discussed below:
1. Unbending – The information section is unbending and Asset Tokenization - the Trendsetter in 2020
2. Reachable – you can track your transaction or previous transaction from anywhere around the world without any interventions or permissions. The information of your transaction will be stored in the hash and you can reach them anywhere anytime.
3. Transparency – The entire function is transparent and hence you can be informed of any action regarding your asset transaction. Also, you can get access to any sort of information that is happening on the platform.
Brief description of the assets that you can tokenize:
The tokenization can involve any kind of financial instruments like shares or securities or bonds and even tangible and intangible assets. Below are some of the asset varieties that you can tokenize using the Asset tokenization platform.
1. Equity shares and bonds – Equity shares and bonds can be digitized and converted into tokens so that you can completely break down your financial responsibility for your equity.
2. Real Estate holdings – Real estate is one of the best choices in providing for fractional ownership and it can be tokenized efficiently.
3. Goods and commodities – Basic goods and commodities to some art features like art crafts and inventions can be tokenized in the asset tokenization platform.
4. Inventions and discoveries – If you have invented a vaccine for the Coronavirus, no problem, you can tokenize your invention with the platform where you can share the ownership with other investors in the platform.
Look before you Leap:
Before getting yourself into the tokenization platform you need to analyze certain factors as it would help survive in the platform like a pro.
1. Know your reason – Being it a company or an individual, you should know the model for your tokenization. You should be known that if you are involving for just tokenizing and holding or selling the assets for a profit motive, etc.
2. Check the limitations of the platform – You should be aware of the agreements and the functionalities of the platform thoroughly before involving in the process. The jurisdiction varies from platform to platform based on the location of the countries and you should be aware of them before starting the investment.
3. Security – You need to make sure of their security system despite the usage of blockchain technology due to the increasing amount of cybercriminals and cyber cases. The tokenization platform should make sure of the security of information and the private key so that no such loss of data due to cyber threat arises.
After being introduced in 2018, the Asset Tokenization has been attracting a lot of investors as it provides a multitude of opportunities and facilities for easy investment via tokens. As it is creating a new trend in the investment criteria, this is the best time to hold on to the trend and grab the opportunity to invest easily and effectively in the digital arena.
Hey, this is Aero Fernandez, Crypto Writer at Icoclone. Inspired by Cryptocurrency and Blockchain, I bring my ideas to light through my formidable content. And, Guess what, Writing makes me lively!
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The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.