Advantages of tokenized assets
(1) Reduced Geographical Barriers - As all the relevant information and records of previous transactions are stored on a permissionless blockchain, individuals can transact from anywhere in the world.
(2) Reduced Reliance on Middlemen - The traditional need for a middleman trusted by involved parties to validate and facilitate transactions is eliminated thanks to the blockchain’s immutability and transparency.
(3) Enhanced Accessibility through Fractional Ownership – Tokenization allows assets to be divided into as many units (tokens) as desired, thereby enabling wider investment participation for high-value assets such as real estate and expensive stocks. While fractional ownership for stocks is becoming increasingly popular in brokerages, it comes with operational overhead that does not exist with tokenized stocks.
(4) Improved Asset Liquidity - Assets that are hard to transfer/trade tend to suffer in terms of liquidity. The use of blockchain to track and transfer ownership substantially reduces friction and therefore permits higher liquidity.
(5) Increased Transaction Efficiency - Blockchain transactions can dramatically improve the efficiency of traditional settlements by reducing time and cost. Complex transactions can be automated via smart contracts, thereby reducing legal and operational costs and minimizing the risk of disputes.
(6) Expanded Investor Base - Flexible fractional ownership improves access to investment opportunities by allowing investors to partake in transactions that were previously inaccessible to them due to capital or liquidity constraints.
The above is undoubtedly only a subset of the vast advantages of asset tokenization.
Last modified 3mo ago
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