Main advantages of tokenization
Let’s take a look at the main advantages of tokenization:
- Generates greater liquidity by allowing assets to be fractioned.
- It does not require intermediaries.
- Safer operations with greater transparency.
Generates greater liquidity by allowing assets to be fractioned.
This reduces entry barriers to investment, allowing access to small investors. In addition, this feature increases the possibility for sellers to more easily find a counterparty to buy the assets.
It does not require intermediaries.
As it is decentralized and uses Smart Contracts, it does not require third parties to carry out operations. This allows transactional costs to be significantly reduced. On the other hand, the lack of intermediaries allows transactions to be carried out in a matter of seconds.
Safer operations with greater transparency.
The use of Blockchain reduces risks, eliminates human error and promotes efficiency, leading to increased transparency and reliability, and reducing the possibility of fraud. These virtues are due to its unmodifiable nature, which makes it an immutable record.
Asset Tokenization is the process by which any good or right is digitally represented, creating a digital asset that we will call a token. This token is the abstract representation of the value of a real asset. Within the Blockchain, they are a set of encrypted and generated data that are stored in a block.