Why Asset-Backed Tokens will be Mainstream

by | Sep 9, 2020 | Uncategorized | 1 comment

When Bitcoin was invented in 2009, many people thought it could completely solve the problems of government-issued currencies. They believed that the time for an “internet currency” to go mainstream has finally come. Governments all over the world paid close attention to Bitcoin and cryptocurrencies in general, and some of them, like China and India, even went as far as restricting cryptocurrencies activities in their territories.

Currently, some governments that had placed bans on cryptocurrencies, like India, have ended up lifting those bans. Some investors who used to be skeptical about crypto have become bullish about them. And the use of cryptocurrencies has also increased significantly, unlike previously where they were mainly used as “peer-to-peer electronic payment method.”

VeChain Thor, for instance, is used for incentivizing the VeChain blockchain that solves supply chain problems. Another example is IOTA, which is used to facilitate machine-to-machine transactions in the era of IoT (Internet of Things). Still, various digital assets are being issued to solve different use cases. The cryptocurrency space is ever-evolving.

Less speculation, more valuation

However, the cryptocurrencies that we discussed above are still limited because of their tremendously volatile nature. Indeed, most institutional investors and governments are still afraid of crypto’s price volatility. So, what is the right measure to solve the volatile nature of cryptocurrencies? Well, tokenization platforms, like Tokenizer and Securitize are issuing asset-backed tokens (ABTs) nowadays. ABTs have the potential to transform the future of mainstream finance.

If you have heard of stablecoins, such as TUSD, USDC, and PAX, you understand why they have a one-to-one valuation to the US dollar. It is basically because each of the issued tokens is backed by a real USD in the issuer’s bank account.

The concept of stablecoins successfully inspired the invention of other asset-backed tokens. For instance, currently, we have PAX Gold, where each token is backed by an ounce of gold. We also have another gold-backed token DGX, where you can trade your token for tangible gold.

The cryptocurrency space has begun to experience the true potential behind stablecoins. The Ethereum blockchain has already tokenized real estate, art, and commodities. The future is bright since every real-world asset can be represented by blockchain tokens. And indeed, these asset-backed tokens are much more appealing for non-crypto investors and regulators who generally do not like to speculate with cryptocurrency prices.

Institutional Investors and regulators have developed a different perspective on ABTs

Institutional investors and governments are already implementing the idea of stablecoins. In 2019, Facebook announced Libra, a digital asset that will be backed by real-world assets. The People’s Bank of China (PBOC) is also on the verge of issuing a digital yuan, which will run on a blockchain network, but without a speculative value since it will be backed by the Chinese Yuan.

The head of the European Central Bank, Christine Lagarde, has also expressed her interest in cryptocurrency. Many central banks worldwide are deliberating on issuing digital fiat-backed currencies. Soon, we will see several governments and big-tech giants issuing their own digital currencies backed by real-life assets.

Final thoughts

The concept of asset-backed tokens is suddenly much more appealing to the mainstream finance world. The reason behind this is because the value of asset-backed tokens is not based on speculations, but real-life assets.

Tokenizer is a blockchain investment banking system that champions accessible, transparent, and safe financial services. We believe that everyone deserves: equal access to investment and fundraising opportunities. That is why we are democratizing access to capital for investors and fundraisers by making investing and fundraising efficient, safe, and accessible to everyone.

Are you in need of raising funds or investing in security tokens? Apply to raise funds in Tokenizer by visiting opening an account here. If you want to invest in security tokens, contact us by creating an account here, and if you want to liquidate and trade-in Asset-Backed Tokens, we have a decentralized exchange designed for you. You can also contact us to order a metallic crypto card at $149 only.

1 Comment

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