Primary benefits of tokenization

The benefits of tokenizing assets are endless, although one of the most prominent ones is implementing fractional ownership. This concept opens a wide range of investment options that differ from traditional asset classes. Furthermore, tokenizing real-world assets increases the level of accessibility for certain investments – especially for newcomers to the market.

For example, imagine a piece of real estate such as an office complex was tokenized. Theoretically, investors could purchase tokens that represent fractional ownership of this office complex which have a specific value. If the office complex were to increase in value, then the tokens that represent fractional ownership would also increase in value.

Another benefit of tokenization is that it helps increase liquidity. Referring to our example of the office complex, the real estate market is inherently illiquid. The process of selling a property is lengthy and costly relative to highly liquid markets, such as the equity market.

However, if a property was represented as a token on a blockchain, the buying and selling process could theoretically be completed in minutes. No paperwork needs to change hands, and there is no need for traditional intermediaries such as estate agents. Through blockchain technology and tokenization, the real estate market could be transformed and made more accessible for buyers, sellers, and investors.

Finally, due to the blockchain’s inherent transparency, the ownership of a specific token can never be disputed. All tokens are recorded within the ledger, and all users within the network can see who owns them. So, if a piece of art was tokenized and two parties were in dispute over who owned it, a quick look at the ledger would instantly resolve the argument.