Assets, everyone has those, from real estate to paintings, the list is endless. Most of the assets are immovable, not easily transferable or physically dividable. The traditional capital investment process is riddled with complications, and Asset Tokenization or Security Tokens can overcome these shortcomings.

The recent times saw the rise of asset tokenization and its underlying implications.

Despite the attention that it has garnered, the process seems obscured and yet to be adequately understood by the masses.

Asset tokenization

The concept of tokenization is the process of transforming assets to a digital token. These assets are difficult to transfer or subdivide into smaller parts physically. Involving paper and legal agreements are cumbersome, hard to track and hard to maintain. So the solution arises. Blockchain technology and Cryptocurrency.

Cons of Tokenization

Tokenization of assets promises notable changes in the cryptocurrency market. But some persistent roadblocks need to be addressed. This way asset tokens will be one of the robust infrastructures in cryptocurrency markets.

Property Rights

There are various questions pertaining to property rights of the tokens. Does owning the tokens entitle the user the ownership of the said asset? If the asset proves to be inexistent, then who would be held liable? These questions will arise when asset tokens are used.

Regulations

For now, asset tokens are not well regulated, and there is little to non-existent government laws to intervene them. Token owners have no legal rights on the property and are not protected by the law.

Centralization

Blockchain technology is adopted while creating tokens because of its ability to establish a trustless environment in a smart contract. However, an entirely trustless environment cannot be established as some part of centralisation is needed to achieve the transformation of the real world, physical assets to digital assets.

Security and Safety standards

There is a need to improve security and safety standards to protect the assets that are connected in the real world along with investors.

Merits of Tokenizations

Despite the cons listed above, tokenization has brought the real-world assets on to a platform and has created immense effects on trading platforms irrespective of the borders that separate them.

Liquidity of assets like real estate, paintings, etc

Allows fractional ownership

Diversification of several assets

Allows newer models for raising capital

Decreases the number of intermediaries

Decreases the transactional fees

Blockchain App Factory on Tokenization

Asset Tokenization, on the whole, forms an untapped area of cryptocurrency and Blockchain technology-based field that needs some workings around rough edges. Blockchain App Factory, the pioneer in the field of ICO development and many more underlying services, has now initiated their journey in the asset tokenization platform. Unlike other platforms which use ERC20 token and Ethereum, Blockchain App Factory will create a fast, secure and reliable blockchain platform that is entirely designed for the sole purpose of supporting the asset tokens, making it a perfect solution for companies or individuals.