Asset tokenization – Complete guide and Brief introduction

0
21

Asset tokenization and the Blockchain paved the way for a new beginning in the digital world, bringing in an excellent alternative for the existing financial system. The crypto space with DeFi is now almost ruling most of the digital entities. The cryptocurrency’s emergence was initially considered to be not worthy, but now it is one of the most valuable assets. Single Bitcoin now costs more than 40K dollars. And this growth is not possible without the security and productivity the blockchain offers.

And still, the growth of crypto assets is paved by the blockchain networks, the evolution of the crypto assets has now grown big, and it can cover anything and everything as a crypto asset. Sometimes the crypto space can make non-existing virtual objects as crypto assets. And the term is known to be asset tokenization.

Tokenized asset offering
Asset tokenization platform

Asset tokenization

The process of converting an asset into a token, which has the digital value of the information, is said to be Asset tokenization. There are various reasons for tokenizing the asset. And now, asset tokenization is the best form of business model in the crypto space. The assets can also be categorized into two types they are,

  • Physical assets 

    Here the asset tokenized is the physical assets, which are available in real-time, and these assets should be converted into digital form for tokenizing them.

  • Digital asset

Digital assets are the assets that are not available in the real world but can be accessed via the digital medium.

And when it comes to tokens, there are two different tokens types based on their fungible characteristics. 

Asset-backed tokenization services

Fungible asset tokenizing

The Fungible asset tokenization is where the assets converted can have various shareable and exchangeable characteristics. These tokens have the exclusive characteristics of,

  • Interchangeability

The Fungible tokens are interchangeable, which means the tokenized asset will also have the same characteristics. This makes the assets interchangeable, where the value of one asset is equal to the value of the other asset—for example, taking an Ethereum coin, where 1 ETH value is equal to the value of the other ETH. Fiat currencies like the Dollar and Euro are the greatest example of Interchangeability. So there is no harm if the token is interchanged with itself with another of its own kind.

  • Separable        

The Fungible tokens have the ability to divide themselves into many pieces, which makes the financial services too easy. The Fungibles can handle the decimals very easily.

Non-Fungible Tokenization

The Non-fungible token is very different from the fungible token, here the asset tokenized will have unique value, and they can’t be easily separable. These non-tangible tokens are even different from each other. These NFTs also act as a key for authentication.

Nft-asset

Tokenizing Asset options

The fungible and the non-fungible tokens can tokenize everything it sees, and the major reason for the people to tokenize is not just about the revenue model. There are many other features tokenization provides. And here are some assets that can be benefitted from the tokenization process,

  • Objects/Things

The assets that are available as items that can be both digital or physical items can be tokenized. Once these types of assets are tokenized based on their token type, they will have different characteristics, which can be used to generate revenue or to stake them.

  • Equity

Shares can also be tokenized, or sometimes tokens can also act as shares. And this is majorly done with the fungible token. They stay as a digital asset where the value of the equity will stay tamper-proof.

  • Funds

These tokens can be used to raise funds from the people who wish to invest in an idea, where the assets will act as a security token. This type of token is very popular among the investors and people who make the offering.

Asset Tokenization Platform

The space where the assets of any type are being converted into tokens, where they hold either fungible or non-fungible characteristics. These asset tokenization platforms will need blockchain associations to maintain the tokenized assets in a safe and secured way. These asset tokenization platforms are equipped with various features to offer the users stress-free tokenization.

Tokenized Asset Offering

Tokenized asset offering is a method of raising funds majorly by converting the assets which have less liquidity, like commercial space, into tokenized assets. This tokenized Asset Offering is made with the ERC-20 tokens, which is a fungible token. There are various benefits to TAO. and TAO can be one of the best offerings for raising funds.

Benefits of the Asset tokenization

The concept made a huge response, and now many people are interested in investing in the asset tokenization concept. They offer various benefits, here are some of them,

Increased Liquidity

Asset tokenization increases liquidity. With the liquidity pool and matching engine, the liquidity of the asset is taken to the next level.

Fair prices

The tokenization will offer a reasonable price to the users, where the auction and other methods ensure the value offered is reasonable.

Transparency

The transparency is very high in asset tokenization. The people will have access to complete information about the process. This enhances the trustability of the people who wish to tokenize the asset.

Ownership

The asset tokenization offers the user who owns the asset extreme authenticity and ownership. With this, the assets are tamper-proof, and no one can have access to the asset other than the owner.

Wrapping Up

The process of asset tokenization can be the best way to influence and enhance trade, finance services in our social environment. The blockchains have created an extensive enhancement in the journey. And to tokenize your asset, you need to work on finding the best asset tokenization platform, and if you are into building your own asset tokenization platform, then you need to find the suitable and best development. These development firms must have immense experience in the crypto sphere, and they should be able to develop a stable product for deployment,