Tag: tokenization

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Crypto Daily Topic Cryptocurrencies

Best Security Token Issuance Platforms 

Thanks to blockchain, asset tokenization is now a possibility. This is the process of converting the ownership rights of real-world assets into digital rights on the blockchain. Assets are tokenized to improve their market liquidity, and also to open up your asset to a global market through the power of blockchain. 

Thanks to blockchain, asset tokenization is now a possibility. This is the process of converting the ownership rights of real-world assets into digital rights on the blockchain. Assets are tokenized to improve their market liquidity, and also to open up your asset to a global market through the power of blockchain. 

Thanks to blockchain, asset tokenization is now a possibility. This is the process of converting the ownership rights of real-world assets into digital rights on the blockchain. Assets are tokenized to improve their market liquidity, and also to open up your asset to a global market through the power of blockchain. 

Several tokenization platforms are scrambling for the spotlight in a bid to become the go-to place for tokenizing assets. Let’s look at some that are hacking the game right now. 

#1. Securrency 

Founded in 2015 and headquartered in the US, Securrency is a one-stop token issuance platform. It supports token issuing, post-issuance support, and the interoperability of tokens across several blockchain networks.

The platform also came up with the CAT-20 and CAT-721 token standards. Tokens created with this standard can be transferred across blockchain networks (including Stellar, EOS, and Ethereum) and legacy financial systems. This interoperability with several blockchain platforms gives it an edge over other platforms that are only compatible with Ethereum. 

Securrency has also embedded customer management applications that customers can utilize to manage investors and token buyers without having to rely on external applications. 

The platform has entered into partnerships with fintech companies SharesPost, AX Trading, Entoro, Vertalo, OpenFinance, and SeriesOne.

#2. Securitize

Securitize is a token issuance platform founded in 2017 and based in Tel Aviv. The company raised $12.75 million from Blockchain Capital, Coinbase Ventures, Xpring (Ripple), NXTP, and Global Brain Corporation. Securitize has also partnered with fintech companies Tzero, Blocktrade, OpenFinance, Airswap, ShareSpost, Hyperion, and Bnk to the Future. The platform offers the tokenization of equity, funds, and real estate, and plans to add debt in the future. 

The company created the DS Protocol, which generates “DS tokens” that can run on top of the ERC-20 token standard. This means the tokens are only compatible with Ethereum. There’s no mention of compatibility with other blockchain networks. 

Securitize tokens can be traded on crypto exchanges as well as be hosted on clientele systems. The platform has a record registry that supports KYC details, a regulations compliance layer, and a communication protocol that notifies investors of industry trends.

Some of Securitize’s clients have been Blockchain Capital, SpiceVC, Augmate, 22x Fund, and Science Blockchain. 

#3. TokenSoft 

TokenSoft is another trusted token issuance platform that features a ton of functionalities. It’s been funded by investors such as eVentures, Base10, Coinbase Ventures, and Fidelity Ventures. The company has partnered with several other platforms, both in blockchain and fintech, such as OpenFinance, Stellar, Hyperledger, R3 Corda, and Tierion, to enhance its service delivery capabilities to customers. 

Services offered include token issuance and distribution, payment of dividends, trading of issued tokens, post-token issuance support, and digital asset custody solutions. 

TokenSoft developed the ERC-104 standard that enables token issuers to manage investor whitelists and investor limits, and issue tokens globally. Some of the clients that have used TokenSoft for token issuance include Andra Capital, Hedera Hashgraph, and the Tezos Foundation. 

#5. Polymath 

Polymath is a security token issuance platform based out of Toronto and founded in 2017. The platform has partnered with various industry players in finance, legal, custody, and escrow such as SelfKey, IdentityMind, OpenFinance, Pegasus Fintech, Vertalo, Blocktrade, Prime Trust, Monarch Wallet, Netcoins, Genesis Block, Tokenizo, Athena Blockchain, Blocktrade, Prime Trust, Glyph, Cassels Brock, Aird & Berlis, and Messner Reeves LLP to provide the highest level of customer experience to users. 

Polymath features a token marketplace, a token studio for token creation and issuance, and token compatibility with the Ethereum network. On the Polymath Token Studio, token issuers can customize and launch their own security token offering (STOs), and still be able to select a Know Your Customer (KYC) and anti-money laundering (AML) service provider of their choice.

Examples of companies that have issued security tokens via Polymath include Corl, 7PASS, MintHealth, IPwe, and BlockEstate. 

#6. Harbor 

Founded in 2017, Harbor is a tokenization platform based in San Francisco. The company is led by individuals with a ton of experience, including former PayPal COO David Sacks, who is also the founder of Yammer, Craft Ventures, and Zenefits. The company managed to raise over $38 million from VC firms Founders Fund, Pantera Capital, Fifth Wall, Kindred Spirits, Andreessen Horowitz, Valor Capital Ventures, Future Perfect, and more. 

Through integration with BitGo, Harbor facilitates investor onboarding through KYC/AML procedures, accreditation, tax forms, e.t.c. 

Harbor supports an ERC-20 token known as R-Token that ensures supported ERC-20 wallets or exchanges are compatible with the necessary requirements for trading. It also uses an Oracle feature to act as the go-between for peer-to-peer token transfers and exchanges.

#7. Swarm 

Swarm is an ”open infrastructure for digital securities.” The company has partnered with several companies such as OpenFinance, Maker, Tron, Security Token Network, Jaxx, Mercury, Copper, MVP Workshop, Monarch, Standard Consensus, Glyph, Blockpass and STOCheck to avail the best services to clients and other platform users. 

It uses the SEC20 protocol that facilitates the creation and issuance of security tokens. Swarm allows users to tokenize all manner of assets, including real estate, renewable energy, agriculture, tech companies, cryptocurrency hedge funds, and so on. Swarm makes it easy to manage, transfer, and trade tokens. 

Other supported functions include STO fundraising and post-issuance and support such as token redemption and the issuing of dividends to clients. Swarm features the Market Access Protocol (MAP), a protocol that supports token interoperability between various players, including issuers, investors, exchanges, and qualification providers. 

Swarm allows users to purchase security tokens with either of several supported cryptocurrencies, which include a native token called Swarm (SWM), BTC, ETH, BNB, DAI, MKR, XLM, XRP, TRX, ADA and DASH. 

#8. Tokeny

Tokeny is a Europe-based tokenization platform founded in 2017. The company serves over 180 jurisdictions and has had $27 billion worth of assets tokenized so far. 

Tokeny allows for the issuance, management, and transfer of tokens. Properties such as individual, company and government assets, business equity, investment funds, and even goods and services can all be tokenized on the platform. 

The platform features a cloud-based T-REX (Tokens for Regulated Exchanges) that allows investors to manage securitized assets such as by paying and receiving dividends and carrying out audits. T-REX also offers interoperability with crypto wallets, exchanges, and identity providers. It also allows clients to issue and transfer assets globally. 

Some of Tokeny’s past clients include Black Manta, Property Token, Lition, Bakari, Mash, Vivo Play, Key Pasco, Neovate, Block Port, and b40Lux. 

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Crypto Daily Topic

Blockchain in the Aviation industry: is it Just a Fad? 

The growth of any industry is pegged on its ability to keep up with evolving technology. For the service industry, it becomes even more important to adopt emerging technologies to improve customer experience. Blockchain is one such emerging technology that is set to catalyze the growth of numerous industries in the wake of the fourth industrial revolution. 

The growth of any industry is pegged on its ability to keep up with evolving technology. For the service industry, it becomes even more important to adopt emerging technologies to improve customer experience. Blockchain is one such emerging technology that is set to catalyze the growth of numerous industries in the wake of the fourth industrial revolution. 

The growth of any industry is pegged on its ability to keep up with evolving technology. For the service industry, it becomes even more important to adopt emerging technologies to improve customer experience. Blockchain is one such emerging technology that is set to catalyze the growth of numerous industries in the wake of the fourth industrial revolution. 

But for the better part of its existence, Blockchain’s potential to disrupt industries only sounds good on paper, with little to no implementation in the real world. As such, it’s impending penetration into the aerospace industry may seem just like a fad with no hopes of implementation. Still, the industry features highly fragmented distribution channels, minimal business model innovations, not to mention its inability to effectively use data and analytics to improve key operations. However, all these could change if airline companies are willing to experiment with Blockchain. As a service industry, air transport stakeholders need to consider using Blockchain to improve customer experience. 

So yes, Blockchain in the aviation industry is not just a hyped craze. In fact, it could mean the difference between the leading airline company, and a less competitive one, is the one that is first to adopt the technology. 

What can Blockchain do For Airlines? 

The intrinsic characteristics of the aviation industry align impressively well with the capabilities of blockchain technology. As such, it’s poised to provide a fertile ground for innovations within the industry in the following ways: 

Efficient data management

The airline and the broader travel industry are characterized by data sharing among multiple actors, from flight booking to immigration, to hotel check-ins and everything in between – all, which creates a complex web of data reconciliation that runs behind the scenes of every touchpoint of a traveler’s trip. 

For an airline company, managing flight data and any other information entail the use of electronic aircraft maintenance records (EAMR). These record systems often operate in isolation, creating data silos that inhibit efficient data sharing. 

Case in point; it’s common for the passenger service department of an airline company to use a separate database from that of the crew management. This compromise, not only operational integrity but also puts revenue generation at stake in case something goes wrong. Since almost every department maintains its own database, it becomes time-consuming to extract data, say, in the event of an audit or investigation of an aircraft accident. Further, there may be discrepancies between data stored in different silos leading to flight delays or other unplanned expenses. 

With too many systems in play, airline companies could benefit from a decentralized database that can facilitate seamless data exchange among various departments of the same company. This way, flight operations will run smoothly with fewer resources spent on maintaining databases. Data reconciliation will also get easier with Blockchain as any update or changes of the recorded information are updated in real-time across all departments. 

Identity management 

In the air transport context, identity theft can be used to commit fraudulent activities, including terrorism, consequently putting other passengers at risk. Although the use of biometric systems has subsidized cases of identity theft, centralized identity management systems aren’t entirely safe from manipulation. Now enter Blockchain. Once an identity is recorded and validated on the network, it is secured using hash cryptographic function, rendering it immutable. The passengers will only be required to carry a unique code — similar to a private key — for verifying themselves. To further suppress the chances of identity theft, the airline authorities can liaise with the state security officials who will be added to the blockchain network to scrutinize the details of every passenger. 

Baggage tracking 

Most airlines outsource their cargo logistics to trusted handlers. Even for airline companies that have in-house cargo logistics, they are riddled with a mix of manual and automated processes creating weak links on the cargo management chain. The outsourced parties suffer from non-standardized processes as well. 

Similar to the identity management use case, every baggage will have a unique code that’s encrypted in the blockchain network. Each phase the luggage goes through, from origin to recipient, its code can be scanned and the location updated on the network in real-time. But, it’s easy to achieve such functionality using traditional technology, why to bother using blockchain technology, you ask. 

Well, if a baggage tracking system was to run on conventional technology, it would create network congestion as it struggles to synchronize data of countless passengers’ baggage and cargo in real-time. What gives Blockchain baggage tracking systems an edge is the fact that it’s decentralized. 

As such, it’s less reliant on the network bandwidth, meaning airlines won’t experience network congestion as the system synchronizes the baggage code. Further, the digital ledger tracks luggage at critical checkpoints throughout the trip; from the initial handover to when, the baggage is loaded into the plane until it’s finally delivered to the passenger. This saves airlines money spent on securing baggage and settling cases of lost goods. 

Repair and maintenance of aircrafts 

The repair and maintenance of different parts of an aircraft need to be logged to serve as a reference to the airworthiness of an aircraft. Usually, records of this maintenance are recorded in bulky manual binders before being loaded in separate databases.

Blockchain can be used to electronically store these records minimizing chances of clerical errors that would otherwise be fatal. The electronic trail will be accessible to the maintenance technicians and aviators, both of who would work harmoniously to ascertain if the aircraft is safe enough for flight.

The same functionality could be replicated on aircraft fueling processes. Using a blockchain application, real-time fuel data would be shared among concerned stakeholders; in this case, the fueling company, the airline, and the bank. In the event fuel levels drop to a certain predetermined level, the fueling company gets a notification and responds accordingly. Once refueled to an agreed limit, automatic payment from the bank to the fuel supplier is initiated via smart contracts. The goal here is to speed up the refueling process and eliminate inefficiencies experienced when handling the process manually. 

Conclusion 

Blockchain application in the aviation industry goes beyond data management. The technology can also be used to tokenize e-tickets using smart contracts, thereby eliminating paper-based tickets and electronic passes. The tokenized tickets will have their own business logic and terms such as value and time of usage, allowing passengers to sell and buy tickets from anywhere in the world. Ultimately, the use of blockchain technology in aviation will inspire innovations of sustainable business models aimed at reducing costs and improving operations. 

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Crypto Daily Topic

Why Tokenization is The Future of Real Estate

The real estate market is one of the oldest markets characterized by slow, paper-dependent processes causing significant delays in the change of property ownership. The transactional friction can be blamed on the complex architecture of the market that involves multiple stakeholders, large amounts of money, and numerous regulations that are dependent on jurisdiction. On top of it all, each transaction has to go through myriad middlemen, from the listing agent to banks and everything in between – resulting in unprecedented transaction costs. 

The real estate market is one of the oldest markets characterized by slow, paper-dependent processes causing significant delays in the change of property ownership. The transactional friction can be blamed on the complex architecture of the market that involves multiple stakeholders, large amounts of money, and numerous regulations that are dependent on jurisdiction. On top of it all, each transaction has to go through myriad middlemen, from the listing agent to banks and everything in between – resulting in unprecedented transaction costs. 

The real estate market is one of the oldest markets characterized by slow, paper-dependent processes causing significant delays in the change of property ownership. The transactional friction can be blamed on the complex architecture of the market that involves multiple stakeholders, large amounts of money, and numerous regulations that are dependent on jurisdiction. On top of it all, each transaction has to go through myriad middlemen, from the listing agent to banks and everything in between – resulting in unprecedented transaction costs. 

Although the structure of the real estate market alone isn’t much of a big deal as every stakeholder has a vital role to play, the resultant dysfunctions it creates needs to be solved as the market keeps on growing. As blockchain technology finds use in almost every industry, the real estate market can also make use of this technology to solve the derailing dysfunctions. This can be done through asset tokenization. 

What is real estate tokenization? 

Tokenization is the conversion of a physical asset into its digital form, which in turn derives/acquires its value from the underlying asset. Once the assets are tokenized, they can easily be divided into smaller pieces and made accessible to a wider pool of investors as a way of raising capital. As such, depending on their investment amount, an investor gets a share of the larger token to act as a representation of ownership. Also, investors can trade their token shares freely on a secondary market based on the current value of the property. 

The issuing, management, and exchange of these tokens is done on a blockchain network, thereby promoting immutable documentation processes, transparency, and traceability. Most importantly, the token investors will have undisputed control over the asset since they own the private keys of the tokens – much in the same way virtual currencies allow users to take control over their finances. 

Benefits of real estate tokenization 

Like in most industries where blockchain has found use, the real estate market is also set to benefit immensely from this technology once realtors warm up to the idea of tokenizing property. Let’s explore some of these benefits: 

I) Improved liquidity

Despite being a safe investment, the real estate market is highly illiquid majorly due to the large amounts of money transacted between the buyer and sellers, as well as the third-parties such as lawyers and banks involved in the transaction. Moreover, due to the large initial investment amount required, potential property buyers are locked out from investing in real estate. 

Property tokenization injects liquidity into the real estate market by allowing assets to be divided into smaller units representing fractional ownership. For instance, a condo going for $1 million can be divided into tokens worth $200 or less, lowering the minimum investment for investors. The tokens can be traded at secondary markets at any time of the day, allowing investors to readily change their assets to cash when they need to. Higher liquidity can also positively influence the value of the asset by removing intermediaries such as the listing agent, bringing an asset’s price closer to its true value. 

The newfound liquidity has the potential to inspire monetization of other aspects of real estate, such as leasing, spurring further development of the entire market. 

II) Automated Processing 

To facilitate the buying and selling of tokenized property, smart contracts can be introduced in the transactions for a seamless and efficient exchange of property ownership. This means less paperwork and almost no intermediaries, which in turn lowers the additional transactional costs. This also speeds up settlements as the tokens contain built-in terms of the contract. 

Smart contracts can also be used to ensure compliance with the laws is maintained. This is especially true for the Know Your Customer (KYC) and anti-money laundering (AML) policies that must be observed in every transaction. Smart contracts will reduce the paperwork involved in these procedures, saving realtors time and money. 

III) Improved market security and transparency 

Property tokens transacted on the blockchain networks are cryptographically secured on the ledger system. Access to these tokens is only limited to the investors who are entrusted with the private keys. This goes a long way into ensuring that property is held only by the rightful owner, minimizing fraud. 

In a similar vein, the distributed ledger system maintains records of all transactions in an immutable and transparent manner, further eliminating the possibility of fraudulent activities. As such, before buying tokens, an investor can review all the past transactions to ascertain the true owner of the property token, whether or not the asking price is realistic or not. This way, there won’t be instances of double-selling nor room for under/overpaying. 

Also, smart contracts further enhance the transparency and traceability of token transactions. In addition to eliminating fraud, the increased transparency brought by smart contracts opens an opportunity for overseas investors to invest in the property market. This translates to more money being channeled into the market, boosting its liquidity. 

IV) Fractional Ownership

In addition to improving liquidity, fractional ownership of property introduces a new investment vehicle through which risk-averse investors can earn passive income. Similar to equities in a security market, tokens can represent multiple owners of a rental property who earn a portion of the rent as passive income. The smart investors can diversify their token portfolio to include land and commercial properties, reducing the overall risk while maximizing returns. 

In theory, tokenization of property offers a myriad of benefits to real estate investors while scaling up the entire market with respect to exponential growth. On the downside, however, tokenization won’t be as easy as many would wish – mainly due to the regulatory hurdles facing blockchain. For starters, many governments across the globe don’t have clear laws governing the issuance of blockchain tokens. Even for those that have already set up laws regulating digital assets view tokens as a type of security or a traditional investment vehicle. This brings in the complex aspect of digital asset taxation, which may scare away investors. 

The issuers of these tokens will also have to invest a substantial amount of time and money in maintaining regulatory compliance with the stringent policies governing digital assets. Even in jurisdictions where the regulations are lenient, marketing property tokens in another jurisdiction where there are different policies will be an uphill task requiring close scrutiny. 

Conclusion

The real estate market has a history of being slow to adapt to emerging technologies. But if the market is determined to do away with long paper processes and slow turnaround time, it has to invest in blockchain technology for the tokenization of property. This will not only solve its long-time problems but also give the market a driver’s seat in the face of modernity and dynamic technological advances. 

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Cryptocurrencies

A Complete Guide to Asset-Backed Tokens 

Blockchain technology heralded a new era of transparency, fairness, and democratization of finance. Currently, there are numerous applications of blockchain that are helping make the world a better place while reducing financial barriers. One of these is tokenization, a process that enables asset owners to sell a portion or the whole asset and get compensated fairly. Also, assets that could only be afforded by the high net worth individuals can now be afforded by the average investor, thanks to asset-based tokenization. 

Blockchain technology heralded a new era of transparency, fairness, and democratization of finance. Currently, there are numerous applications of blockchain that are helping make the world a better place while reducing financial barriers. One of these is tokenization, a process that enables asset owners to sell a portion or the whole asset and get compensated fairly. Also, assets that could only be afforded by the high net worth individuals can now be afforded by the average investor, thanks to asset-based tokenization. 

Blockchain technology heralded a new era of transparency, fairness, and democratization of finance. Currently, there are numerous applications of blockchain that are helping make the world a better place while reducing financial barriers. One of these is tokenization, a process that enables asset owners to sell a portion or the whole asset and get compensated fairly. Also, assets that could only be afforded by the high net worth individuals can now be afforded by the average investor, thanks to asset-based tokenization. 

In this article, we break down asset-based tokens, the rationale behind tokenizing assets, and take a look at assets with great potential for successful tokenization. 

What Are Asset-Based Tokens? 

Asset-based tokens are tokens whose value is backed by a real-world, tangible asset. Essentially, they are crypto coins whose value is pegged against an existing asset value. People tokenize real-world holdings so as to increase their liquidity (the real-world assets) in a market place. 

Asset-backed tokens are offered during a Security Token Offering (STO). 

An STO is a process where an investor exchanges money for tokens representing an investment. As such, we can describe security token offerings as events that distribute securities. And since tokens represent real-world property, STOs represent a secure investment option. 

Why Tokenize an Asset? 

Asset owners or managers tokenize assets to increase liquidity for the underlying asset. Liquidity is the degree to which an asset can be quickly and easily purchased or sold at a price reflecting its true value. Securities like stocks and bonds have high liquidity as opposed to assets like cars, real estate, jewelry, and so on. Liquidity commonly affects an asset’s trading volume. Good liquidity can also enhance an asset’s value since it’s easier to convert such an asset to cash.

Examples of Tokenization Use Cases

Tokenization is mainly used to back assets that generally have limited liquidity. Some of these assets include derivatives, real estate, art, company shares, commodities, and other assets that usually take long to find a buyer. 

Below are examples of asset tokenization use cases: 

☑️Tokenization of company equity.

☑️Tokenization of real estate investment trusts (REITs) for investors who want to venture into real estate. REITs can be customized to suit client needs or characteristics, such as risk tolerance 

☑️Tokenization of real estate or rental returns. Today’s real estate is prohibitively expensive to scores of people who would otherwise be interested in a smaller percentage of the property. Tokenization allows such property to be “fractionalized,” allowing more people to invest in a property. 

☑️Tokenization of intellectual property such as film licensing, royalty payments, etc. This allows fair distribution to every party that has a claim to such a movie, song, album, or book. 

☑️Tokenization of accounts payable and receivable, potentially replacing factoring and other models of supply chain finance. This substitution would allow data to flow seamlessly between accounts payable and accounts receivable in Enterprise Resource Planning (ERP) systems. 

Tokenizing an asset increases its value by opening up previously unattainable markets. Since asset tokenization is based on smart contracts, it also eliminates third parties and intermediaries – saving up money in the process. Moreover, investors who can’t afford these third parties are afforded the opportunity to take part in asset ownership. Not to mention, the automated tokenization process is faster, saving everybody’s time. 

Categories of Asset-Backed Tokens

There are four main categories of potential tokenization of assets; these are:

  • Tokenization of equity and debt
  • Tokenization of commodities
  • Tokenization of non-fungible hard assets
  • Tokenization of non-fungible soft assets

I. Tokenization of Equity and Debt 

Tokenizing equity and debt is a method of fundraising for startup companies. This process removes the need for intermediaries, such as banks and stock exchanges. 

Fractionalization of equity ownership is by no means a new concept – stock certificates, timeshares, mutual funds, etc. have existed for a long time. But asset-backed equity and debt tokens now offer something much more – an immutable, transparent, and liquid digital representation of a company’s debt or equity. Any shareholder can access the blockchain platform and verify ownership and its authority to trade. 

As such, although debt and equity are assets that anyone can purchase and sell today, blockchain technology radically improves the process. Private equity funds are traditionally low liquidity assets that require investors to hold their stake for at least one year. Hedge funds are another type of asset that is moderately liquid – requiring investors to hold for several months. 

Increasing liquidity via tokenization would dramatically increase the value of these asset classes, enabling investors to better adapt to market fluctuations.  

II. Tokenization of Commodities

Commodities that are normally traded on exchanges can also be converted into security tokens. Whether it’s oil, gas, grain, sugar, tea – any commodity that’s already traded through intermediaries can be tokenized. 

Cross-border trading of more fringe commodities such as hydro, wind, or solar power can also be done via a blockchain-based exchange. Governments, utility companies, and consumers can all participate and interact on a single trustless and open platform. 

As for tokens that are backed by real-world assets, physical verification is needed to establish the accuracy of the token value. Already, there are third-party auditors that exist for this end. These auditors can now combine real-life verification with blockchain-based tracking to increase confidence in the marketplace. 

For gold, which commonly trades through exchange-traded funds, tokenizing it completely changes the game. Each token represents part or the whole gold bar that’s stored and audited by a third party “oracle.” The oracle verifies the gold’s weight, purity, authenticity, etc. 

Bitcoin, the ‘digital gold,’ could be even replaced by tokenized gold in the future. The advantage Bitcoin holds over real gold is its ability to be easily divided and transferred. It’s easy, for instance, for a token exchange to take Bitcoin worth $3,000 and send 1% of that to another crypto holder. It’s, however, challenging to do the same with a bar of gold. But once you tokenize it, it becomes much easier to sell and transmit a fraction of that gold, and the same is true for other commodities.

III. Tokenization of Non-fungible Hard Assets

Hard assets are tangible and physical assets. Hard assets also present many opportunities for tokenization. In this category, we will look at two hard assets: real estate and collectibles. 

  • Real Estate Tokenization

Tokenizing real estate could make it a borderless investment, more profitable, and more affordable for all types of investors. Real estate here means things such as rentals, hotel chains, motel chains, care homes, etc. 

  • Collectibles Tokenization 

Traditionally, collectibles such as rare art pieces have been a preserve of the rich. With tokenization, anyone anywhere can hold a percentage of a collectible. 

Also, tokenizing an asset helps it achieve more value in the long term. An art piece, for instance, can be tokenized and distributed on the blockchain with each ‘shareholder’ holding a tradable share of the piece. 

IV. Tokenization of Non-fungible Assets

Soft assets are assets that are intangible and which are usually hard to quantify and establish their value. We’ll look into two types of soft assets: intellectual property and digital asset collectibles. 

  • Intellectual Property (IP) Tokenization

IP assets such as copyrights, royalties, patents, and trademarks have traditionally had low liquidity and have never had a secondary market place on which investors can buy. Tokenizing IP ownership would not only enhance its liquidity but also increase its value.  

  • Digital Asset Collectibles Tokenization

Usually, it’s difficult to prove ownership of digital collectibles – with the only proof being a contract between the provider and the user. However, tokenization could create a market place for these virtual goods, even increasing their liquidity and hence value. 

Challenges and Opportunities for Asset-Backed Assets

Asset-backed tokens go toe to toe with Bitcoin in terms of being fungible, transferable, scarce, and durable. As such, asset owners can find a market place for their assets easier than ever. 

Tokenization could face a hostile environment depending on territory. For instance, China, Qatar, and South Korea have banned STOs outright, while countries like the US, Singapore, Germany, and the EU allow it, albeit with strict regulations. Other countries like India are yet to take a definitive stand on STOs. Some jurisdictions like Malta have granted STOs free rein – placing no limitations or regulations on them whatsoever. 

Tokenization might also be prone to user error, and it’s easy to lose your tokens if you’re not careful with your wallet private key address. 

Asset-backed tokens are immune from the volatility swings experienced by utility tokens and cryptocurrencies. Asset-tokens can trade 24/7 if listed in crypto exchanges. This exposes them to market liquidity from investors all over the world. Also, asset-rich companies may soon adopt tokenization, increasing its visibility. This would popularize the idea of asset-backed tokens, pushing it into the mainstream. 

Conclusion 

Asset tokenization enables a physical asset to be divided into smaller parts, making it easier to convert into cash. Thanks to asset-based tokens, times may be gone when people had to wait for months or years to finally get a move in market position for their assets. And anyone, regardless of geographical location or the capital they possess, can get a share of attractive assets that they previously couldn’t. Tokenization will help create more inclusive, fair, and effective marketplaces.