Just like the early stages of the internet, not many people are taking blockchain technology seriously. Many observers believe that the new technology is being over hyped. With the increasing use cases and lifestyle transformation, blockchain is set to change lives and disrupt many industries.
Big players in the assets sector are beginning to realize the potential behind the new technology. Focus is now shifting from cryptocurrency to how the technology is disrupting specific sectors through asset tokenization. Virtual currencies are different from assets that are tokenized.
The Broad Asset Tokenization Picture
The asset tokenization end game is to profit the investor. Through a tokenized economy, you are simply storing and managing asset in a digital form. When you buy a token, you acquire the rights to benefit from the assets’ profitability in the future. Growth in value is directed by market forces unlike in crypto currencies where prices can be manipulated by whales.
Simply put, when you purchase a security token in an asset in Florida, when the value of the assets increases by 25% once sold, you get a share in the profit through the token. If the asset takes long to sell and you need to cash out your tokens, you can easily turn to P2P secondary market and get your cash back early.
Here are 5 reasons why asset tokenization is the future:
Asset Tokenization Enables Fractional Ownership
Asset tokenization operates under the mantra; if you cannot afford the whole, you can own in bits. This is a one of the advantages of tokenization. As an investor, you have the freedom to stake what you can afford. Remember you do not have to purchase an asset; instead, you invest in it.
Fractional ownership of assets means more users can come onboard to invest. What’s more; you have the freedom to choose the security token to invest in. As a first time investor of the experienced, you can decide how to spread your investment using the fractional ownership concept.
Easy Access to Funding
Banks are known to charge high interest rates and seeking funding from traditional financial institution has never been easy. The vetting process and the collateral demands are just heartbreaking. Many are kept away from borrowing by the existing bureaucracies and numerous third parties.
With a tokenized economy, funding is seamless. You can get funding in a few minutes and invest in your asset choice. Once you invest, you do not have you do anything; the processes are automated in a secure environment.
Any Asset under the Sun can be tokenized
Tokenization is not restricted to select items; the process covers both physical and digital assets. There are many startup firms that are already working on tokenizing real estate, precious metals, work of art, goods and services.
Tokenizing Assets secures them
The end game is to entice the consumer with wide range of tokenized services and goods. This will translate into savings and elimination of fraud that is common in traditional assets trading platforms. After all, security tokens ride on blockchain which is immutable and has no weak entry points for manipulation.
Regulator Soft Spot for Asset Tokenization
Regulators appear to have a soft spot for Security Token Offerings (STOs) as opposed to Initial Con Offerings (ICOs). This could be a good signal for the future of asset tokenization. STOs are seen as more secure, less fraudulent and having more real life use cases compared to ICOs.
There is so much interest in asset tokenization and the adoption rate of the technology will determine its future. Once the regulators put their house in order and clear the current market uncertainties, asset tokenization will not disappoint the investor.