With the emergence of blockchain technology, the way regular and institutional investors invest has thoroughly changed across the board. Asset tokenization is disrupting the financial industry in real-time. From real estate property to painting to precious metal to companies share, everything is being digitized and tokenized by the digital asset tokenization services on top of blockchain technology.
Stats: The global asset tokenization market size is expected to grow from USD 2.3 billion in 2021 to USD 5.6 billion by 2026, at a compound annual growth rate (CAGR) of 19.0% during the forecast period.
But, What Exactly is Asset Tokenization?
Asset tokenization is the process of creating digital tokens that stand-in for a specific fraction of the actual value of the physical/ digital asset. It enables investors to purchase direct fractional ownership of the asset.
With digital asset tokens, asset tokenization companies help create a strong link between the on-chain and the off-chain world by associating the characteristics, economic value, and rights of the physical assets with the digital ones.
The digital tokens are created on a distributed ledger or on top of a blockchain platform such as XDC networks. The value that is stored on the blockchain in the form of digital ownership can’t be erased, tampered with, changed, or altered by any single authority, thanks to the decentralized nature of the blockchain infrastructure.
The asset tokenization platform helps create an adequate number of digital tokens on an immutable ledger to democratize the access to valuable assets across the globe – enabling investors of all sizes to invest without bias. Tokenized assets open up a broad range of opportunities for growth and diversification of assets in the traditional and crypto markets.
Limitless Benefits of Asset tokenization
Accessible from Anywhere
Tokenized assets can be accessed from anywhere thanks to the asset tokenization platform. Investors and users can access their assets 24/ 7 literally from anywhere in the world.
The probability of fraudulent activity drastically reduces with tokenized assets. The underlying blockchain infrastructure record and maintains a shared and immutable ledger of all types of assets owned by each individual investor all across the globe. This ledger is generally public if it is a public or hybrid blockchain infrastructure. Public ledger brings transparency to the entire blockchain ecosystem as well as restrict illegal claim of ownership. It provides investors with a clearer view of the updated ledger of universal ownership records.
In the cases where ownership of an asset is disputed, investors can look up to the immutable ledger that is live on the blockchain to resolve the ownership rights issue. This is one of the biggest advantages of the immutable ledger because it helps investors feel secure and confident in the blockchain infrastructure. It also helps establish trust, transparency, and accountability in the blockchain-based system.
Reduces Overall Cost
Tokenizing your business assets with digital asset tokenization services eliminates intermediaries from the financial system. When the involvement of intermediaries gets eliminated, it also results in reduced fees and enhanced clarity in the overall financial operations.
Digitized assets are often highly divisible. With blockchain, asset tokenization companies enable billions of investors to enter the asset market with fractional ownership. Financially empowering billions of medium and small-scale investors all across the globe.
Trouble-Free Way to Invest
Asset tokenization removes the biggest barrier that small investors face which is the minimum investment threshold. Additionally, asset tokenization companies help improve liquidity in the market with fractional asset ownership models. It helps the investor to hold a diverse range of assets, eventually reducing the inherent risk that all kinds of investments pose.
Factors Driving the Adoption of Asset Tokenization
Fungibility, divisibility, and responsiveness are the noteworthy factors of asset tokenizations. These factors also help determine their real-world use cases. According to market research, the three major gigantic markets that are first to get disrupted with asset tokenization are real estate, art, and precious metals.
Fungibility is the capacity to trade an asset. A prominent example of fungibility is money, precious stones such as gems including tokenized assets that can be traded on the blockchain. On the other hand, the property portfolio is an in-fungible type.
Divisibility determines whether the respective asset can be divided into fractions and traded in separate portions. The best example of divisibility is cash and gold bars/ coins. But physical art is not divisible, which is not the case with tokenized art.
Responsiveness of physically owned assets is several times lower in comparison to digitally owned assets. What asset tokenization platform do? They help determine the proof of ownership within a shorter time span which is not the case with physically owned assets because physically owned assets need to go through multiple levels of intense paperwork just to transfer ownership of an asset. The asset tokenization companies help fast-track the asset trading process with easy transfer of ownership features.
Real-World Use Cases of Asset Tokenization
One of the blockchain-focused tokenization applications can be found in the healthcare and pharmacy sectors. The tokenization of Medical supplies such as pharmacy supplies and tokenization of patients’ personal health records are two areas where asset tokenization platforms can play a major role in the near future of healthcare.
Real Estate Sector
With the help of digital asset tokenization services, real estate can be tokenized which will help fractionalize the ownership of expensive property. Under such a module, each token will represent a share of the expensive real estate property. The tokens lower the barrier to entry in the expensive real estate market and also provide the opportunity to trade on various exchanges.
As we speak, digital asset tokenization services are tokenizing art pieces all over the globe. Asset tokenization of artistic work solves the major challenges faced by the industry at large. It opens the art market to the broader public. It is also efficient because tokenization platforms help create an immutable registry of art copyright records.
Yodaplus lets businesses harness the limitless potential of asset tokenization. On Yodaplus, businesses can instantly tokenize their valuable assets ranging from sports cards to artistic paintings without any hassle and share them with their thriving online community.