Which impact can Tokenisation have in the future?
Our world is full of assets, for e.g. shares, stocks, gold, diamonds, oil or even land. Physically moving many of these assets or subdividing them is not possible. What buyers and sellers do is exchange deed papers mentioning the transfer of right of ownership from one person to another. However, documenting every transfer deed is a lengthy, cumbersome process that is difficult to track. When you start tokenising these assets there is a whole world of possibilities opening up.
Tokenisation: What’s it all about?
Tokenisation has come forward as a solution for the problem. The process will lead to converting rights to an asset into a digital token on Blockchain. Why Blockchain? The reason for moving real-world assets on to Blockchain platform is to remove the enormous cost and lengthy procedure of transferring the right of ownership and secondly, will remove the lack of transparency in the system.
The Tokenized asset will give the power to the owner to get the best price from the most interested user. For e.g. I can sell my apartment in Italy to an American citizen who is paying me the best price possible. Now as the tokens are divisible, it helps the American citizen to sell half of my flat to another American citizen by sending him half of the asset tokens.
The technology world has proposed many ways and means to put real-world assets on to the Blockchain platform. There are multiple platforms (WishKnish, LAtoken, Digix) already working on Tokenizing real-world assets .
What’s the advantage of Tokenisation?
- Real-world assets being Tokenised will open a borderless market where anyone can buy/sell any kind of asset anywhere.
- The cost of physically moving the asset bought/sold will be greatly reduced
- The blockchain platform will make the entire process decentralised making the system more resilient.
- No need to pay for escrow services like banks or lawyers.
- The transfer of ownership of real-world assets from one person to another will speed-up.
- Tokenisation will offer the ability to monitor asset conditions and potential financial risks in real-time.
Tokenisation is here to stay
The word ‘Tokenisation’ has become a hot topic mainly due to recent phenomenon of Initial Coin Offering. A company issues a new cryptocurrency, digital coin or token that investors purchase to invest in a company. As a result, a company can raise millions of dollars without the conventional VC funding model. It is no wonder that in the last three years, the world of cryptocurrency has grown from just a handful to more than of 4,000.
Let’s introduce TAO — Tokenised Asset Offering
When you take a physical asset and created a token out of it, the token is directly reflecting the underlying asset. By selling these assets as a token this should be called a TAO, not an ICO. TAOs are coming in 2018 for sure, and for us in Akeo AS the future is bright for sure.