How to tokenize assets using blockchain technology?

First, you need to know what the term "tokenization" means. Tokenization is a unique way to digitally represent an asset. Pretty simple, right? What a token is and how you can use it can vary greatly. The key idea is that tokenization takes an asset and allows it to be commercialized.

Shares

Shares are a form of tokenization. They are a store of value and represent a certain percentage of ownership of a business or company.

Money

Believe it or not, money used to be the gold standard. In other words, the banknotes, like the US dollar, represented an amount of gold. This not only proved to be more practical than paying in physical gold, but it also supported the value of the currency, helping to legitimize its value.

Divisibility

This highlights one of the main advantages of tokenization - it allows you to perform divisions. Take something large and complex and transform it into a form that can be easily divided into smaller, more accessible parts.

For example, you wanted to buy a house, but could not because of its high price. Or maybe you don't want to pay for its full amount because you will only use the house for a few months of the year.

With tokenization, you can create a company to buy a house, and then add 3 of your friends to pool the money together. Now that there are 4 of you, you can divide the cost in proportion to the amount of time you would use in the lodge). It's a way to get what you wanted, no problem, to buy the entire facility.

How to tokenize assets?

So why use tokenization?

The concept of asset tokenization itself only really became known with the advent of the smart contract in combination with blockchain technology. Both asset tokenization and blockchain have become the basis for much of the value of the other. As in the example with the house, if you trust everyone you deal with, then there is no need to use such an advanced system, you can take everyone's word for it.

By integrating blockchain technology, you can leverage the value of what is possible with tokenization. You no longer need to trust everyone you do business with. The advantages of blockchain technology include:

·        Greater transparency; there is a clear distribution of ownership rights to different wallets. Everyone knows who owns what and what they are entitled to.

·        Enhanced security; like other blockchain applications, cryptography is built into any tokenization from the ground up. By their very nature, they are protected by mathematical cryptographic algorithms.

·        Improved traceability: Most blockchains allow users to see transactions as they occur. The vast majority of tokenizations are on similar platforms, and those that are not on those platforms have mathematical proofs to ensure accountability.

·        Increased efficiency and speed; by cutting out the middleman, tokenization increases speed and reduces costs. This limits the bureaucracy, no paper and electronic transactions are executed as quickly as transactions with the speed of the consensus protocol.

·        Cost reduction; finally, given that there is a removal of middlemen, the only costs associated with transactions are the costs of the network you are working with. This is usually significantly less than the fee for brokerage services.

Do you still not sure how to tokenize assets using blockchain technology? Or do you have a specific project in mind? If you would like to learn more about how to tokenize assets using blockchain technology, please contact us by email [email protected].

The review was prepared by specialists from a blockchain development company Cryptor.guru