Speaking of asset tokenisation, do you know what it is?
In the crypto ecosystem, new disruptive proposals are emerging every day to improve the features and functionalities of blockchain technology, and with so much application and innovation, you would think that technological advances are a thing of the past.
With so much application and innovation, anyone would think that technological advances are something from another planet. The truth is that blockchain applications are revolutionising investment in projects, financing and the sale of real estate, among other things. It is an ecosystem that begins with the tokenisation of assets. Do you know what it consists of and how it works?
Asset tokenisation: concept
We understand tokenisation as the issuance of blockchain tokens that represent real exchangeable assets, for example: works of art, real estate or shares in a company. From a technical point of view, in a blockchain, such as Ethereum, there is not only its primary currency, such as Ether in this case, but it also allows us to create other digital tokens within the platform.
Tokenisation means issuing a digital token within the blockchain, which can be transmitted from one wallet to another, and using this token to digitally represent securities (debt, real estate, shares, etc.). We create this token or digital token so that investors can access it. This token will grant a right or obligation over the company.
Characteristics of asset tokenisation
Transforming a real-world asset, tangible or intangible, into a digital asset with a representation protected by the blockchain is possible thanks to its characteristics:
- Digital representation- recreates any asset through its unique, proportional digital version.
- Fractional ownership: One of the main characteristics of tokenisation is the ability to own fractions of an asset, which facilitates its sale and the possibility of benefiting from price increases.
- Speed: It allows transactions to be carried out much more quickly and cheaply.
- Rights and ownership: Tokenisation allows rights and ownership to be transferred to the digital representation.
- Control- provides greater control and security of rights and ownership by the token owner.
- Transparency: tokenisation platforms and blockchain technology ensure transparency in investments.
Cryptocurrencies were the first application of blockchain, but its underlying technology is catching up with traditional markets. Is it the beginning of a new era?
How tokenisation works
The asset tokenisation process works as follows:
- Feasibility study: The asset is analysed in detail, as well as its nature and general conditions. The aim of this phase is to check whether it is a viable tokenisation process or not.
- Specification: In this phase, the type of token that will represent the asset is defined. The most common tokens are Utility, Security and Equity. In addition, the asset's interaction platform is also studied.
- Creation of smart contracts: When the time comes to create the smart contracts, the terms that will control the tokenisation process will be recorded in them. At this stage, it is important to determine the tokenomics of the token.
- Legal requirements: None of this would come to fruition if the legal and fiscal aspects of asset tokenisation were not taken into account, so it is important to review the conditions in each country or region where the digital asset is issued.
- Launch of the token: Once the previous phases have been completed, it is time to launch the token and its platform, so users can now register on the platform to start trading.
Blockchain technology has infinite applications, some yet to be discovered, but what is the advantage of it all?
10 advantages of tokenising assets
Fairer, more transparent, active financial markets... Behind the great benefits of asset tokenisation there are other advantages:
- Liquidity: by representing securities that can be moved from wallet to wallet, we can transfer ownership of the token and obtain liquidity more easily.
- Transparency: It is one of the most important technologies in terms of transparency, security and immutability.
- Convenience: Gone are the days when the main means of communication between investors and market makers was by telephone. Tokenisation platforms facilitate all operations.
- Ease: They facilitate the transfer of assets and their decentralisation into real estate, debt, etc.
- Security: Tokenisation operates on the most secure technology in the financial system today.
- Representation: they represent projects, products or other assets, so they have real backing.
- Sharing: The great advantage of tokenisation is that it allows something of great value to be shared among many people.
- Financing: It allows financing to be obtained much more quickly than with the traditional system.
- Peace of mind: investors can rest assured that their money will not be leveraged for years.
- Visibility: Investors can solicit investment from hundreds of thousands of people, making their financial product available to anyone.
so what's the bottom line on all this?
Asset tokenisation at a glance
Advantages, features, functionalities... We have talked about a multitude of factors related to the world of blockchain and tokenisation, but what is the crux of it all?
The blockchain lays the solid foundations of a technology that is just spreading its wings to take flight in the complex sky of cryptography.
Thanks to it, we can transform the way we invest and exchange assets. In short, it makes the impossible possible: if a couple of years ago it was unthinkable to split a building into different parts, today it is possible with tokenisation. Splitting a cake is easy, but how do you split a banknote, a gold bar or a building?
Tokens are digital assets that represent these goods, so something with a lot of value can be shared among many people, making it more liquid in the market, and getting funding faster than with the traditional system.
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