Home Business Insights & Advice Top benefits of blockchain asset Tokenisation

Top benefits of blockchain asset Tokenisation

by John Saunders
26th Aug 21 1:34 pm

Blockchain technology has opened up a flood of innovative solutions and investment opportunities that people had only imagined before. The core technology behind cryptocurrency is now being used as a mainstream technology in various applications in different industries. But above all, it’s the investment opportunities it holds that entrepreneurs find remarkable.

It’s helping investors trade more profitably through BTC trading software, asset tokenisation, blockchain stocks and EFTs, and many other enterprise solutions. However, it’s asset tokenisation that has opened up vast opportunities for investors to grow and diversify assets in the market. If this opportunity is yet to catch on you, look at the benefits it holds.

What is decentralised finance?

Decentralised Finance (commonly referred to as DeFi) is a blockchain-based form of finance that does not rely on central financial intermediaries such as brokerages, exchanges, or banks to offer traditional financial instruments, and instead utilises smart contracts on blockchains.

“Here at DefiCoins.io – we take a look at some of the best DeFi coins in the market and study their role within their respective DeFi ecosystems. We also explain the process of how to buy DeFi coins from the comfort of your home without paying a cent in brokerage fees or commissions.”

What is asset Tokenisation?

It’s a process that transfers rights to either an intellectual, physical, or financial asset to a digital token. This means that a blockchain token is issued in place of a tradable asset, but in a way, you can trade it as a whole or a fraction. You can tokenise practically anything, including music, art, collectibles, debt, cars, real estate, etc.

Benefits of Tokenisation

Tokenization of assets reduces the barriers for investors seeking entry and exposure to illiquid or physical assets, which is one of its major benefits. Here are more benefits:

Elimination of intermediaries

When you think about the process of buying shares in the stock market, there are just so many intermediaries you have to trust in between before a successful purchase. There seems to be an intermediary in each share purchase process, which increases the transaction complexity, costs and reduces trust and security.

On the other hand, asset tokenisation on a blockchain removes intermediaries since the technology is trust less and doesn’t need human verification processes. That eliminates the cost associated with intermediaries, speeds up the investment process, and eliminates the chances of human error.

Asset divisibility

Another significant benefit of blockchain technology is the ability to split it into fractions of separate tokens. Now, it’s possible to make the market liquid, something that couldn’t happen before.  Tokenisation breaks down investment shares to amounts available to many. The best example of the divisibility of assets is in the real estate industry. You can invest in a property without having to rent or buy the whole of it.

For instance, a property selling for $300,000 can be divided into tokens that can significantly lower the investment barrier for many. But the tokenisation on the blockchain is not limited to real estate, artwork, and collectibles, among other assets that have been huge beneficiaries of the technology.

Improved safety

Blockchain technology is immutable, meaning that once a transaction is recorded on the blockchain, it’s unchangeable. There’s no officer to bribe or a way to hack the system. In addition, data is encrypted through cryptography, where confidentiality of open data is ensured. This means that every participant in the transaction can view and download their code using their keys— an auto-generated algorithm of numbers and letters.

Since it’s also on a distributed registry, information on the blockchain is stored on many devices simultaneously in synchronised copies. A distributed registry offers more security in transactions, which all investors look for in a blockchain investment or any other investment.

Final thoughts

There are many more benefits to tokenising assets on blockchain. It creates more transparency and the ability to automate investment through smart contracts. Asset tokenisation brings much-needed liquidity, tractability, and visibility to the market. This challenges the traditional investment options and the existing perception regarding investment in assets such as gold, real estate, and assets that were deemed indivisible.

Tokenisation on the blockchain is a revolutionary concept, but its mass acceptance and implementation in numerous industries have made it more than just revolutionary.

 

The above information does not constitute any form of advice or recommendation by London Loves Business and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Appropriate independent advice should be obtained before making any such decision.

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