Asset Tokenization: The Upcoming Big Thing in Finance
Asset tokenization transforms physical assets into digital tokens representing fractional ownership rights for holders of the tradable underlying assets <
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Did you know that by 2030 the global digital assets market will reach $6.7 trillion? (researched by BCG and ADDX)
Post date: 19/05/2023 – by author
Image by macrovector on Freepik
As more businesses transform to digital, digital assets become essential to the new economy. This will change how we see investment, transaction, and asset ownership. In this article, we will explore the definition and types of digital assets and how they shape our digital economy.
In this article, we will explore together the following.
Digital assets are created, stored, and transferred in a virtual form representing different values such as medium of exchange, ownership rights, equity, voting rights, and rewards for participating in a particular ecosystem or products or services. Blockchain is a necessary technology providing security and decentralization to record and verify transactions of digital assets.
Digital assets can be classified into 2 main categories:
These publicly well-known digital assets use cryptographic techniques to secure and verify transactions and control the production of new units, such as Bitcoin or Ethereum. Non-fungible tokens (NFTs) are another popular form representing ownership of specific digital content like artwork, music, or videos.
These publicly less-known digital assets represent ownership of a real-world asset such as real estate, art, stock, or commodities. Securities laws regulate digital tokens and provide legal rights to the holder, such as ownership or a share of profits. This digital asset must have proper documentation, disclosure, and regulatory compliance.
The Stock Exchange of Thailand (SET) is an example of an organization that regulates digital tokens. According to SET, there are 2 types of digital tokens:
For society, digital assets are very beneficial in increasing transparency and security in many activities, especially elections, charity, or governance related to applied blockchain technology. Thanks to their fractional ownership, speedy transfers, and low-cost transaction fee, they enable the public to access and take part in the global financial market easily. It’s an effective way to promote financial inclusion.
Image by macrovector on Freepik
For companies, digital assets can help to increase profitability by expanding the market research customer base by offering new products and services in digital forms. Similarly, companies can use them in branding and marketing, such as logos, social media posts, or marketing materials using digital artwork. Moreover, companies can save costs from virtual storage, which is relatively low compared to physical storage.
For Individuals, digital assets allow retail asset holders to own high-value assets, which generally require high investment. For instance, in real estate investment, investors must invest a large amount of their funds to own a property, which is different for digital token holders. Moreover, they provide opportunities to diversify asset portfolios.
SIRIHUB is the first-ever real-estate-backed token in Thailand. With the approval of the Thai Securities and Exchange Commission (SEC), the project raised 2.2 billion baths ($65 million) from investors within a week through ICO from the total expected raise fund of 2.4 billion baht ($71 million). This means the success rate is about 91% in a very short period.
The digital tokens are backed by 12 hotels and resorts of Siri Venture Group and provide the rights to get dividends and capital gains from these luxurious assets. The project uses the Tezos blockchain system, a public blockchain, to issue the token.
Source: Bangkokpost
Digital assets, which include cryptocurrency-related and digital tokens, are revolutionizing finance and investment. They provide more asset accessibility to the public and more ownership transparency through blockchain technology. We can expect to see a big wave of digital tokens that will significantly impact the global economy in the coming years.
How to turn it into your opportunity? Learn more about it in our upcoming articles soon.
Asset tokenization transforms physical assets into digital tokens representing fractional ownership rights for holders of the tradable underlying assets <