Asset Tokenisation in Blockchain

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Asset Tokenisation in Blockchain

18 March 2021   |    Blockchain

Tokenization helps in bridging the gap between real-world business cases and global investors. The tokenization of assets represents a real-world tradable asset, a value, stake, or anything in the business ecosystem. Once derived and formulated, these tokens could be traded, and the ‘ownership’ and the ‘value’ associated with each token would be transferred accordingly. This kind of ownership with customer-centric features like high liquidity, blockchain immutability, real-time executable smart contracts, higher accessibility, and the easily manageable platform has created an interest in today’s economy.

Why it is required: Digital assets are mainly emitted by tokenizing an underlying asset with money-like properties (medium of exchange, storage of value, and unit of account). These are then deployed to a blockchain network for security and verification purposes. Once the process is complete, these assets could be swapped on a primary or secondary market exchange with the necessary infrastructure to realize these assets’ trading, settlement, and custody.

Industry 4.0 Breakthrough: The tokenization of assets represents the next significant milestone for blockchain technology.

Types of Tokens: There are many ways to classify the tokens; they can be single-use or multi-use, reversible or irreversible, authenticable or non-authenticable, cryptographic or non-cryptographic, and numerous other combinations are available. Although at a systemic level, Tokens are often divided into the following basis:-
  • based on Nature: Tangible Assets, Fungible Assets and Non-Fungible Assets, which focuses on value investing.
  • based on Speculations: Currency Tokens, Utility Tokens, and Security Tokens, which focuses on usage.

Area of Opportunity: The new “tokenized” economy offers tremendous potential for creating a more efficient and inclusive environment among the industries of Finance, Real Assets, Healthcare, Sports, Enterprise.

The Year of 2020: The tokenization of assets has received a massive boost of interest in 2020. From equity to human tokenization, the opportunities to generate “tokenized assets” is only limited by imagination.

The benefit of Asset Tokenisation:
  • Accessible: can be accessed globally from anywhere in the world
  • Immutable: ownership cannot be removed
  • Transparent: no one can claim to own assets fraudulently
  • Cost-effective: terminate the involvement of intermediaries

Future Trend: Tokenization is a massive trend, a much bigger story than cryptocurrencies, initial coin offerings (ICOs), and even blockchain. This year, at the World Economic Forum, there was a discussion about what assets might be tokenized, with examples ranging from property to agriculture. Although the ones that attracted the most of the deliberations were on the system ‘to enable farmers in emerging markets to raise finance by selling future crop yields.’

TRST01 understands the process of creating and managing tokenized assets and subsequently wants to build the proper infrastructure to harness the opportunity of a digital world, which would ultimately reduce costs, heighten efficiency, and enhance trust, transparency and security.

Written and compiled by Pratik B, Business Analyst TRST01

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