7 Reasons Why Digital Asset Tokenization Can Launch Security Token Boom in 2019
Seven Assets That May Launch Security Tokens In 2019
There are those that believe that one of the biggest trends in the cryptocurrency industry for 2019 is the tokenization of non-liquid assets – such as, real estate, precious metals, current, sports, venture capital funds, and more. This new trend may impact how investors treat their assets in the future.
Many believe that the change may occur due to the development of cryptocurrency and blockchain. The technologies are becoming a more permanent part of the financial industry because they provide a cost-effective method for securitizing common assets. Essentially, things of real value become marketable securities.
For instance, rather than owing a painting outright, the owner can tokenize the product and offer digital shares of the painting. The fractional ownership enables buying and selling of digital shares so that users can benefit from a reduction in prices. This also may lead to enhanced levels of transparency. Tokenization may also benefit other asset types, such as loans, student loans, auto loans, and mortgage backed securities.
Such tokenization also promotes more liquidity, fractional ownership, settlement, compliant, lower transaction costs, and so much more. Here are a few types of assets that may be tokenized by 2019.
- Venture Capital Funds
These funds are recognized for being not liquid and they often take years before they earn returns. A few projects that are currently looking to eliminate barriers to venture capital funds include EQUI, Spice VC, and blockchain Capital. With more liquidity, users may have an easier time participating in the asset class and more investors may mean larger pools of return.
- Precious Metals
A few blockchain startups have been getting into the precious metal space, such as CEDEX. This platform enables users to trade diamonds, gold, silver, and to then have them delivered to a custodian to release the funds to a buyer at the end of the transaction. The platform is also recognized for its high levels of transparency. By tokenizing precious metals, fractional ownership is possible and makes some of the most precious metals affordable.
- Real Estate
Real Estate is another area where there are several blockchain startups participating, such as Deecoin, Blocksquare, and Alant. These platforms are looking to commercialize both commercial and residential real estate so that users can purchase fractions of the properties and each and income on them. Further, with this platform, users have fewer barriers to entry and lower transactional costs as well.
- Rare Art and Luxury Cars
When it comes to rare art and cars, these items have often been limited to those who have the funds to won them. A few blockchain projects are currently working to change that. A few platforms are hoping to allow buyers and sellers to transact without having to go through traditional auctions. Further, the fractional ownership aspect makes it easier for investors to diversify their portfolios.
One platform, Binkabi, is hoping to mitigate the geopolitical inefficiencies associated with commodities. Binkai features a solution called Barter Block, that is designed to facilitate the development of end-to-end cross border trading. Further, tokenization of commodities may promote hedging and financing.
- Sports Teams and Celebrities
Tokenization of sports teams may allow fans and investors to invest in their favorite teams and to see a future return from the investment. Clubs can also sell rights and receive future projects so that they boost the team’s value and sign players with bonuses as well.
- Flat Currencies
Finally, stable currencies are connected to traditional currencies to offset volatility in the market. There have also been several like-projects that have been able to curb volatility. Together, the asset class may reduce transaction costs and processing times.