Asset tokenization is the process by which an issuer creates digital tokens of an asset such as property or financial assets like shares, funds etc.

These tokens are shared and shown to the buyer on a distributed ledger or blockchain. Blockchain guarantees that once you buy tokens representing an asset, no single authority can erase or change your ownership which means that your ownership of that asset remains entirely unchangeable unless you want.

Lets see this by an example. Suppose you have a property worth Rupees 500,000 in Bangalore, India. Asset tokenization could convert ownership of this property into 500,000 tokens with each one representing a tiny percentage (0.0002%) of the property.

Now if you need to borrow Rs 50,000. it wouldn’t make sense to sell your property, instead of selling the whole property, instead, you issue tokens on a token exchange. When someone buys a token, he/she is a share holder in that property for the percentage they have invested.

What can be tokenized?

Almost every form of asset. From traditional assets like venture capital funds, bonds, commodities, and real-estate properties to other assets like sports teams, race horses, artwork, and celebrities, companies worldwide use blockchain technology to tokenize almost anything.

What are the benefits?

One is liquidity because you can buy and sell anytime. Even properties trade takes no time. Tokenization can also help improve liquidity for historically illiquid assets like paintings.

Other is Accessibility as it is easier for everyone to invest into tokens. Then it is Transparency as it is based on blockchain technology.

Follow Zinkpot Capital on Youtube for videos