Asset Tokenisation: Here’s What We Know About It

Tokenising an asset can help its owner churn quick capital by issuing tokens on a blockchain, that would allow people to purchase it and trade it on other exchanges as well.

Written by Radhika Parashar, Edited by Siddharth Suvarna | Updated: 13 October 2022 17:22 IST

Asset Tokenisation: Here’s What We Know About It

Photo Credit: House of Hiranandani

Tokenised stocks are often backed 1:1 to traditional stocks

Highlights

Any physical or virtual asset can be tokenised
tZERO and Bitbond are among popular asset tokenisation platforms
Tokenised assets can be purchased via fiat or cryptocurrencies

Asset tokenisation is the process of creating digital units of a physical or virtual property that is held on blockchain networks. Each of the tokens of an individual property, amount for some percentage of the entity. For instance, Person A holds a property in New Delhi. Asset tokenisation of this property could chop up its ownership into 100,000 digital tokens (or even more). Each of these units can represent say, 0.0002 percent of the property.

Tokenising an asset can help its owner churn quick capital by issuing tokens on a blockchain, that would allow people to purchase it and trade it on other exchanges as well. Every token buyer owns 0.0002 percent of the ownership in the asset in the form of an NFT.

Tokenising an asset can increase the liquidity of the assets. The property owner could sell 50,000 tokens, instead of selling the entire property and losing its utility as a liveable space.

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What can be Tokenised?

Almost next to anything can be tokenised. They may be exotic things like sports teams, artworks, and celeb merchandises as well as traditional assets like binds, commodities, capital funds, and real estate, claimed a blog by Hadera.com.

Steps to Tokenise assets

After selecting what asset to tokenise, its owner will have to choose a cryptocurrency and linked blockchain to back up the token. Smart contracts will be developed for potential buyers to agree upon.

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Along with crypto wallet integration, the plans for launching the token for trading in the markets also need to be put in place. As per a Cronj research, tZERO, ConsenSys Codefi, Polymath, and Bitbond are among popular asset tokenisation platforms.

Tokenised stocks are often backed 1:1 to traditional stocks, allowing holders to get the same benefits as owning the underlying stock. These can be purchased via cryptocurrencies or fiat currencies on supported trading platforms.

The worldwide tokenisation market is predicted to increase from $1.9 billion (roughly Rs. 15,648 crore) in 2020 to $4.8 billion (roughly Rs. 39,533 crore) by 2025, at a CAGR of 19.5 percent during the forecast period. Tokenising assets have, in recent times, picked up as a trend.

In July, Brazilian fintech firm BEE4 planned to launch the first local marketplace for tokenised stocks in the Latin American country. Essentially, BEE4 will be replicating the structure of a traditional stock exchange while allowing traders to tokenise their public offerings.

In April, Goldman Sachs had announced its plans to see if real life assets can be tokenised along with non-fungible tokens (NFTs).

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Further reading: Cryptocurrency, Digital Assets, Asset Tokenisation

Radhika Parashar

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Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More