March 26, 2022

Understanding Tokenization And How It Is Disrupting The Financial Industry

Originally published at International Business Times. Read the full article.

A token is a digital twin of a physical object or service in a blockchain that provides undisputed ownership and provenance, reduces transaction costs, and enables transaction automation through smart contracts.

A token can represent anything ÔÇô a character in a game, airline ticket, work of art, coins, etc.

Real estate tokens, digital artwork, fashion, licenses and certifications, capital markets fundraising, sports moments, virtual worlds, gaming, and crypto collectibles are just some of the thriving use cases in tokenization.

The key messages are:

  • The IDC estimates the worldwide tokenized asset market to reach $500 billion by 2025.
  • The benefits of tokenization include fractional ownership, increased liquidity, Faster settlement with lower transaction costs, and Improved transparency.
  • Utility tokens and Security tokens are various token types, and both can be fungible or non-fungible.
  • non-fungible tokens represent a unique asset and are not interchangeable with other same-type tokens as they typically have different properties and values.
  • InterWork Alliance (IWA) is developing the Token Taxonomy Framework (TTF) for tokens to ensure interoperability.
  • Tokenization ecosystem key players include Token issuers, Regulatory compliance companies, Regulators, Trading exchanges, User account providers, Legal firms, Custodians, and Collateralized loan/interest providers

The benefits of tokenization, especially fractional ownership, transparency, increased liquidity, and improved security, create new opportunities for improving the value transfer systems.

New tokens are being created every day, from physical assets to intellectual properties.

Want to learn more about how tokenization is disrupting the financial industry. Talk to an expert.