From cryptocurrency to collectables, tokenization is changing the game.
The way we invest is changing and we are changing with it. Digital assets are becoming the new normal. Are you prepared?
Tokenization works by converting the rights of a hard asset into a digital token.
Buyers can own as many shares, or tokens, as they want. If they buy all the tokens, they’d be the owner of the asset but not the legal owner. This is why blockchain as a public ledger ensures that ownership of the tokens cannot be erased. Blockchain is necessary for this kind of service.
Tokenization is reshaping the way investors will value their assets and how they will be purchased from now until the end of time. This is all thanks to cryptocurrencies and blockchain. Tokenization is also moving past currency and investing and is approaching pop culture and gaming uses.
If you are ready to dive into tokenization at the ground floor, contact Alpen Partners today! Continue reading to get a glimpse of what tokenization brings to the table. You may be surprised to see how tokenization is changing the future.
Tokenization finds its roots back in 2008 with the invention of Bitcoin. Bitcoin was the result of a side project by Satoshi Nakamoto, the alias of an anonymous programmer and the inventor of Bitcoin. Bitcoin was the first cryptocurrency and remains one of the most important. In 2008, Bitcoin was launched as a peer-to-peer electronic cash system.
With Bitcoin came blockchain, the digital, public ledger where cryptocurrencies occur. Through a blockchain, everyone in the network can see every account balance. Every transaction includes a file with a sender, recipient public key, and the number of coins involved in the transaction. The transaction is sent with a private key by the sender in the form of cryptography.
A blockchain is decentralized and is constantly growing with completed blocks. The most recent transaction is added in chronological order, which allows the blockchain participants to keep track of the transactions without central recordkeeping.
Since then, cryptocurrency remains one of the most well-known uses of cryptocurrency but is definitely not the only one. Tokenization does not only hold value as a currency but can now be used to represent hard assets.
Tokenization of Assets
Popular assets like stocks, real estate, carbon credits, oil, and gold can be difficult to physically transfer and/or subdivide, leading buyers and sellers to utilize paper trading that represent some or all of the asset. Paper trading can be complex, with legal agreements that can be hard to track. One way to combat this process is by switching to a digital system.
Digital systems allow commodities to be traded without the use of paper but can come with a hefty overhead and relies on trusted participants. Fintech developers, major financial companies, and startups are all switching their gaze to asset tokenization.
Blockchain tokens can represent real-world assets and gives investors the opportunity to democratize ownership of various asset classes. It can be used on any non-liquid assets; venture capital funds, real estate, precious metals, currency, art, sports teams, and beyond!
While tokenization isn’t a fully integrated reality just yet, 2019 is set to be the year where developers and financial companies bring it to the forefront of our minds and change how we trade forever.
A non-fungible token, or NFT, is a digital collectible and is predicted to be the first big consumer use of blockchain. They possess unique digital characteristics that make them different and digitally scarce.
Non-fungible tokens are the digital equivalent of baseball cards. Each token varies in information and level of rarity.
One example, and the origin of the term “non-fungible token,” was CryptoKitties created by Dieter Shirley. CryptoKitties were digital cats that rose to popularity in early 2018. The digital collectibles were so popular, and were transacted at such a high rate, that the Ethereum blockchain slowed to a crawl!
The reason CryptoKitties were so iconic was because they were the first use case for blockchains, that was not currency, that created value for users and built an entire ecosystem.
Our Tokenization Partners
As a way to stay on top of the evolving realm of tokenization, Alpen Partners has made new partnerships with two emerging tokenization experts.
Our new partner is an expert in the world of digital assets
Sygnum is a fintech company based in Switzerland and Singapore that works with clients with their digital asset needs.
This tech-driven company works to empower financial services in the expanding economy of digital assets. Their goal is to give clients and partners integrated solutions to store, trade, manage, and issue digital assets. Sygnum utilizes ledger technology to change the financial industry.
Many are doubtful of the migration to tokenization and digital asset. The Sygnum team is ready to challenge the status quo of the financial industry by getting behind the growing tokenization ecosystem, offering cutting-edge and practical solutions to digital asset problems. They want to move beyond mainstream awareness and grow everyday use.
The shift we are seeing is that of a digital age. Tech-savvy individuals are seeking easy access, convenience, efficiency, and speed in every part of their lives, including their finances. Having the ability to make transactions from the convenience of a phone or other electronic platform is what is creating this strong push towards Fintech [link to Introduction to Fintech page].
Looking beyond blockchains, we are seeing technology have a hand in simple things such as payment and holding money, and more complex life aspects like investment advising. Some companies are even developing ways artificial intelligence can assist in hedge fund managing!