The Transformative Power of Tokenisation

Tokenisation, in essence, transforms the value of an asset into a digital token on a blockchain network. Imagine converting a physical asset, like a piece of real estate, into a digital certificate, enabling easier online trade and management. Remember also that digital certificates carry the same legal rights as traditional share certificates. 

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Consider the impact of widespread tokenisation on real estate investment funds: Traditionally, these investments involve complex processes and intermediaries. Tokenisation can massively simplify this, allowing investors to buy and sell fund fractions (digital assets) with the ease of stock trading. 

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Tokenisation's efficiency can be thought of as being the equivalent of transitioning from a manual, paper-based system to an automated digital one. 

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Let's distinguish between traditional assets and tokenised assets:

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Traditional Assets: 

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• These are tangible or intangible assets (think stock, bonds and currency).
• Ownership is most often represented by physical certificates or is maintained on centralised electronic registers. 
• Transactions involving these assets often require intermediaries, like brokers or banks, leading to delays and additional costs.
• There's usually a higher barrier to entry due to the potentially substantial capital requirements.

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Tokenised Assets:

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• Tokenised assets represent ownership in an underlying asset, but this ownership is recorded on a decentralised digital ledger (blockchain).
• The decentralised nature of blockchain means a higher level of security, transparency and immutability. Each transaction on a blockchain is encrypted and linked to the previous transaction, forming a chain that is nearly impossible to alter without detection.
• Transactions are peer-to-peer, removing the need for most intermediaries, which streamlines deal processes and reduces costs.

To learn more about the world of alternative assets, download our report: We Need to Talk About Tokenisation.