Is tokenization good for Asset Management?
The asset management and investment sector is very dynamic and fund managers and stakeholder companies are always on the lookout for the best innovative way to stay ahead of the competition. Many players in the sector are looking into way of tapping into the blockchain technology for sustainable solutions.
AI and Big Data are some of the areas being explored but tokenization appears to be in focus for asset management. Asset management and investment have been a preserve of the wealthy and institutions. However, with the onset of decentralization, the marketplace is opening up thanks to asset tokenization.
New Face in Asset Management
Traditional assets are being sliced up making it easier for the ordinary investor to have a slice of the market. Through asset tokenization, assets like real estate, precious metals and work of art are some of areas where tokenization is set to ease the process of asset management.
Tokenization is similar to securitization with the only difference being that assets are broken down into fractions which work as shares. If you cannot afford the whole asset, the process allows you to buy shares which are represented by tokens. It is a simple way of converting illiquid assets into liquid ones.
Asset Tokenization Future
Tokenization rides on blockchain and through Security Token Offerings (STOs), a concept that is being keenly followed by investors and fund managers. With tokenization bureaucratic processes will be a thing of the past and middlemen role will rendered obsolete.
Asset tokenization is not riding smoothly in the market; it has its teething hiccups. However, the small projects that are working towards a tokenized economy are reaping the benefits. Traditional investment outfits are resisting the change but tokenization future is bright.
New Management Outlook
Many traditional asset management platforms are resistance to change. This is due to the complexity of its stakeholders and third parties. Automating their systems to cut down on the number of players has become a nightmare. However, it is clear that the investment world is ready for change.
Digitization of asset management gives the investor the ability to be visible globally, have access to better prices for their tokens or shares and have access to a market that operates 24/7. This is a huge shift from the traditional investment where things are slow and systems do not work on non-week days.
Ease of Market Access
In a tokenized economy, everyone has freedom to choose what to invest in irrespective of the physical boundaries. Liquidating and fractionalizing assets means more investors come on board thus making prices competitive and standard. With blockchain, a new asset investment face is getting unveiled.
Buying traditional shares comes with many conditions while in a tokenized economy, every transaction is transparent and there is no double spending. What’s more; you can trade your shares anytime to the highest bidder and get the best returns. There are no hidden costs, fraud or delays in a tokenized environment.