What is tokenization?
Tokenization is the process of creating and issuing digital tokens on a blockchain to represent units of asset ownership.
Any asset can be tokenized: be it physical or digital, tangible or intangible. From traditional securities such as equities and bonds, to artworks, precious metals, assets such as intellectual property rights, and of course, real estate.
Tokenization allows for the fractionalized ownership of assets, which would not be practical in traditional markets. This opens up a broader potential investor base, democratizing the market for high value assets.
The benefits of tokenization
By its very nature, Blockchain is global and permanently available, providing a 24/7 worldwide marketplace, which ensures greater liquidity, faster settlement and fair pricing.
Smart contracts and distributed ledger technology (DLT), guarantee the security, transparency, immutability and proof of ownership for tokenized assets. Intermediaries are excluded, so transaction costs are reduced.
Implementation of KYC (know your customer) and AML (anti-money laundering) processes on several public blockchains, brings an additional level of trust, opening up the market to institutional investors.