- September 10, 2020
- Posted by: Anita Iyer
- Category: Blog
What Can Be Tokenized?
The sky is the limit; pretty much everything could be tokenized today and in the coming future with smart contracts.
The introduction of tokenization is changing the way we invest in assets – company shares, real-estate, payments, physical goods and commodities are being tokenized on the blockchain, which is digitalizing real assets.
Real Estate Tokenization
For instance, the real-estate sector typically involves two parties, a buyer and a seller. Now suppose you own an apartment evaluated at $300,000 and need $30,000. With tokenization via block chain, you can convert your ownership rights of the apartment into digital tokens that represent the total shares of the $300,000 evaluation which is 300,000 tokens (1 token = $1). Now you will be able to sell 10% of the apartment for 30,000 tokens which equal to $30,000 in your pocket. Partial or fractional sale of your asset is now possible.
Benefits of Tokenization:
1. Tokenization brings the investment world together as you can invest across borders in different available properties or businesses without your physical presence.
2. Tokenization abolishes the need for middlemen. Investment or trading of assets typically takes weeks or even months to be settled and usually involves third party companies to mediate the transactions, paperwork and qualifications, which can be a costly and slow process. By tokenizing assets with smart contracts on the blockchain, we can eliminate intermediaries as the technology provides full transparency.
3. Trading of assets usually takes days to months to achieve a settlement. It involves external entities to validate the documentation of transactions and investor’s eligibility, which adds extra costs to the process. However, tokenization removes the need for intermediaries with the block chain’s ability to provide dependability and transparency.
4. Tokenization allows for assets to be fractionalized, which opens the door of investment opportunities to millions of people. People will be able to invest smaller amounts into properties as mentioned above and can invest more at a later stage.
5. Besides paving the way for new avenues for investment, tokenization creates new liquidity in markets for assets that are traditionally highly illiquid.
How iOWN Tokens Enables Real Estate Transactions
Today, several companies are creating regulated platforms to tokenize assets, making it possible to facilitate the selling or buying of tokens that represent fractions of ownership. Allowing new set of investors to participate in the investment process has opened the opportunity to diversify their portfolio with assets they previously could not afford.
The iOWNX equity-based crowdfunding platform utilizes the iOWN Tokens to fund campaigns across many sectors such as real-estate. The platform also utilizes uOWN Tokens to tokenize assets, for example, the worth of one apartment = 2 million iOWN. If you invest 10% (200,000 iOWN Tokens), you will own 10% shares represented in uOWN Tokens. The iOWNX platform will also facilitate the secondary trade where someone can sell his uOWN Token (shares) in the built-in marketplace with a few clicks.
To conclude, tokenization of assets and shares provides a progressive approach to how it is traditionally done. Fractional ownership of assets is now completed in a swift, cost-effective and secure manner with smart contracts stored in the blockchain. Tokenization will open doors to partial ownership of assets with a few clicks attracting millions of investors who can afford to own fractions of a complete asset.
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