Why the World is Shifting to Tokenization

by | Sep 4, 2020 | Industry | 0 comments

Jack Welch, one of the most influential personalities in the business world, once said that “Change before you have to,” and I couldn’t agree more. In our constantly-evolving world, the power to change, and to do so promptly, is now important than ever.

As life becomes more and more digital, and your data is prone to theft and damages, protection of personal information is the most challenging task for companies. To offer the highest level of security to customers, businesses must change- and here comes tokenization!

Even if you haven’t embraced it, tokenization is quickly and surely touching every area of our life. The world’s credit card giants, like Visa and MasterCard, have entered into tokenization agreements to make electronic transactions safer.

The American Express provides Token Services to minimize fraud and foster digital growth. ATLANT real estate company (duped “Airbnb Killer,” by the way) that was launched two years ago facilitates the tokenization of real estate ownership. Still, more and more financial services and government structures are embracing the token economy.

The world is excited about the endless possibilities and new ways of managing economies with the use of Asset-Backed Tokens (ABTs). Indeed, tokenization is a revolutionary step to eliminate human factors and guarantee the safety to all tokenized assets.

The goal of tokenization is to reduce the usage of weakly-protected (“sensitive”) data by replacing it with tokens, unique digital identifiers, which can be used in transactions. At first, it was used to prevent credit card fraud. But currently, tokens can be transferred via various wireless networks without exposing personal details.

The possibility of data being stolen is reduced since all the information is stored in a secure token vault. Even if the process of transferring tokens from a merchant to a client is hijacked, it won’t expose any information.

Reasons why the world is embracing the token economy

Elimination of geographical barriers

A person can invest in a property located in any part of the globe without stepping their legs in the mother country of the asset. Tokenization makes investment easier, secure, and fast.

No intermediaries

Traditionally, trading of assets usually takes several days to months to be finalized. It required third parties to legalize the documentation of transactions and investor’s eligibility, which adds extra expenses to the process.

However, tokenization eliminates third parties with blockchain technology’s ability to offer immutability and transparency.

Fractional ownership

Tokenization makes assets highly divisible, enabling investors to venture into small percentages of the tokenized assets. It radically eliminates the barriers for a larger pool of investors to enter the market. For instance, you can purchase just a 5% share of a tokenized commodity, like Gold.

Quick and cost-effective transactions

The exchange process is entirely automated since the transaction, and transfer of tokens are carried out using smart contracts. Automation removes the burden associated with buying and selling, as no middlemen are needed. Consequently, it speeds up the deal execution with cost-effective transaction charges.

An extensive network of investors

Traditionally, the trading of real-world assets has a restriction on the level of fractionalization. However, asset tokenization removes the barrier by making it possible to trade tokens representing fractions of ownership.

Fractional ownership of assets allows more investors to participate in the investment process. That way, tokenization creates opportunities for a new set of investors and enables them to diversify their investment portfolio into assets that they could not afford previously.

Final thoughts

Tokenization is a revolutionary technique that calls for innovative solutions and revision of old-fashioned ways of managing wealth. We must be willing to change, and after that, the token economy will upgrade our life to entirely new levels. “Change before you have to,” remember?

Contact us today for all your asset tokenization needs, investing, fundraising, and trading in Asset-Backed Tokens. We are your listening and caring partner in financing your next ventures.

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