Tokenization is not just Own’s USP; it’s a revolutionary technology that has the power to change the entire financial services industry, and its rate of adoption is rapidly increasing.
But while some companies are already experimenting with tokenized proof of concept projects, but others are still unsure what it means – let alone how it can benefit their business.
If your organisation falls into the second category, here is our beginner’s guide to tokenization, to give you all the essential information you require.
What is a token?
At its most basic explanation, a token is something that digitally represents an asset. This could be money, property or a valuable item like art or precious metals. In an equity context, Own uses tokens to represent shares in a business, enabling companies to raise the capital they require for rapid growth.
Why should companies tokenize their assets?
Representing something with a token makes it easier to track ownership. Each token has a unique identifier and owner, which can be logged in a register – such as our Decentralised Share Register. The DSR stores investor information on the blockchain in a secure, tamper-proof manner.
This traceability is just one benefit, however; there many ways in which tokenization can improve the way companies manage their assets. These include:
- Transparency – every investor can see the tokens they own and view historical transactions
- Accuracy – information is updated centrally in real-time, so every person accessing the records sees up-to-date data, and no records can be deleted or unofficially changed
- Fractionalization – part-tokens can be offered to investors, creating new fundraising opportunities that enable new shareholders to take a fractional token stake
- Cost-effective – with fewer third parties involved, transaction fees are reduced and the process is more efficient
- Secure – as tokens are saved to the blockchain there are secure contracts between everyone involved in the transaction, and data is tamper-proof. The decentralised ledger system also means responsibility for information doesn’t lie with one specific person
- Opportunity to innovate – with data collected effectively and securely, businesses can analyse investor information to understand their audience in greater depth and build tailored communications
How does the tokenization process work?
Tokenization enables companies to have a direct dialogue with investors, unlike traditional systems that often involve third parties such as banks or brokers. This overcomes typical frustrations associated with raising capital, like slow-moving processes, the need to co-ordinate multiple stakeholders and paying-out high fees to custodians.
Instead, the token sale process is much simpler:
The market is still developing, tokenization is predicted to account for 10% of the blockchain ecosystem’s global GDP by 2024, a $10 trillion opportunity worth investing in.
Where can I tokenize my assets?
To find out more about tokenizing technology and the potential benefits for your business, visit our tokenization page.