07 Jul 2020 Jane Whitmoore
What Are The Most Common Industries That Switch To Tokenization?
Crypto and Digital currencies are becoming more and more commonly used. This creates an opportunity for the utilization of a currency that is not centralized and controlled by powerful financial institutions like central banks and governments. What people love about the blockchain technology is the combination of privacy and transparency that it is offering. This means that even though the technology allows users to track specific transactions, it does not allow anyone to know the identity of the individual owning a certain wallet.
A lot of different individuals are investing as well as starting to trade with digital currencies due to their high liquidity. These are global currencies, which are of the same value for everyone, no matter the geolocation.
The tokenization of assets refers to using blockchain technology to securitize a company's asset by issuing a token, which represents the real value of the asset in the digital world. Due to the popularity of the concept, a lot of industries started integrating these instruments into their toolkits and leveraging the efficiency of the system. One of the most popular markets are entertainment, cloud computing, banking, cloud storage, and many more.
Everything began with a cryptocurrency that everyone has heard of - Bitcoin (BTC), which is distributed on a corresponding platform. BTC is an independent cryptocurrency, however, this has led to the ability to build other cryptocurrencies through the deployment of its underlying blockchain technology.
For example, 0x is an Ethereum-based token. The blockchain in this case offers a way of verifying the volume of the data as well as recording its usage making.
Having tokenized assets adds extra layers of utility to the given system and eliminates traditional problems with the usual payment methods. Therefore most of the newest and most attractive platforms are actively working on developing and integrating blockchain into their ecosystem. Tokenization presents advantages like faster settlement, low amount of overheads, increased liquidity, risk management, and so on.
The entertainment industry is one of the very first ones to start adopting the tokenization of assets. Popular individuals, such as Wesley Snipes try to capitalize on assets tokenization. Together with the Liechtenstein Cryptoassets Exchange (LCX), he plans on creating a tokenized $25 million movie fund called Daywalker Movie Fund.
The casino industry is one of the first ones to start switching to more tokenized approach with lots of services like online casino slots accepting cryptocurrencies and operating under the assumption that a lot of people are soon enough going to have an electronic wallet one way or another. This means that they started creating tokens that are specifically designed to be used in the casino’s ecosystem for gambling purposes.
The last few decades have shown an acceleration in the ways industries are pushing the cities' and countries' boundaries. One such enormous industry is the transportation system. The inclusion of blockchain technology has opened up new opportunities for the platforms to cut spendings and become more efficient. The technology currently assists in making streamlined systems where a better functioning public ledger can access the information regarding the functionality and efficiency of corresponding vehicles.
The architecture and construction industry are one of the best-regulated sectors. They employ a wide variety of professionals who are tirelessly working on very complicated projects. It is becoming increasingly hard to validate the identities and maintain the quality of work due to the fact that it involves processing huge amounts of information. The blockchain-based environment makes it possible to ensure that everything is coming from an authentic source and is delivered accordingly.
Tokenization in the real estate industry is the process where fractional ownership of assets is offered to individuals or institutions with the help of blockchain tokens. Essentially, it makes illiquid real estate assets liquid.
In 2018, a New York-based asset management firm called Elevated Returns has made its first step in the tokenization of a real estate deal. As an aftermath, the St. Regis Resort in Aspen, Colorado, has been offered for $18 million worth in Ethereum blockchain. This was done by using Indiegogo for sales as a partnership with Templum Markets LLP. The company originally intended to sell half of the assets, however, ended up offering only 19% ownership through the sale of tokens.
Risks and Securitization
It is worth noting that there are risks involved in the tokenization as well. Cryptocurrencies and blockchain do not have any global regulation, therefore, different countries approach this technology differently. Here’s an example - if token-issuing bodies sell the property, then the token holders have the tokens but don't have the legal right to the property or any legal protection to it.
This means that while the blockchain offers peer-to-peer trusted transfer of digital values, it also limits the type of tokenization that can be done purely on-chain. The issue here is with securitization, which to a certain degree can be alleviated. The blockchain technology offers transparency, non-corruption of data as well as non-duplication and immutability.Blockchain Cryptocurrency Crypto Market Blockchain Development Blockchain Application digital asset digital Securitization Securities Blockchain News