
Tokenization
Tokenization is the process with which assets (particularly, real-world assets, RWAs) are converted into a digital representation on the blockchain, through smart contracts. Tokenization can also be used to secure sensitive data or to efficiently process large amounts of data. By tokenization, it is possible to create digitized or tokenized assets out of a tangible or intangible asset. Tokenization capitalizes on the capability to use and leverage blockchain technology to securitize assets, both traded and non-traded. A tokenized asset represents a divided share in the ownership of real, financial, or digital assets that is recorded on a blockchain in the form of digital tokens. By means of an asset tokenization, an issuer creates digital tokens on a distributed ledger or blockchain, which represent.
Tokenizables: what can be tokenized?
Tokenization entails fractional ownership and proof-of-ownership. In the realm of finance, this involves traditional assets like venture capital funds, bonds, commodities, and real estate. Other types of assets may also be subject to tokenization like stablecoins, NFTs, sports teams, race horses, and artwork. Blockchain technology is used to tokenize almost any source of value or interest. The main categories of tokenizables are:
- Assets: any source of value (resource) that can be transformed into monetary form (or financial form). Assets can be personal or commercial. Personal assets can include money (currencies) and property. Business assets include different types of assets that are grouped and utilized for operations (monetary assets, current assets, fixed assets, intangible assets, etc.)
- Equity: any form of interest, holding or ownership in a venture or business or scheme. For example, a share of stock can be converted into a token to be represented in the digital form of security tokens stored online in a wallet. Other examples are shares in mutual funds and private equity. For tradable assets, investors can buy securities on a stock exchange.
- Services: any type of services that are provided to customers. These services can be used to raise funds or conduct business. The tokenized assets (tokens) can be used to purchase goods or services provided by service providers or suppliers.
- Funds: a special category of equity. For an investment fund, shares or holdings can be tokenized and tokens are created and issued to holders of such shares (i.e., their respective shares in the fund or portfolio, etc.)
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