The digital transformation of our society has brought about radical changes (read: improvements) in various sectors. One of the constructs that is increasingly being used is tokenization. Tokenization meets many needs and offers many practical advantages when it comes to making investments.
To give a practical example: through the possibilities offered by tokenization investing in real estate much more accessible. Enough reason to delve into this option especially now that the traditional financial sector offers. You little or no possibilities to get a return on your savings. That is why you can read everything you need to know about tokenization in this article.
What is tokenization?
Tokenization is an investment method whereby a total value of for example. Physical products real estate projects access ownership or other investments is divided into smaller parts. These smaller property rights represent a value proportional to the investment. One of the main advantages of tokenization is that it makes investing in larger projects much more accessible for many people.
Possible liquidity requirements are therefore much less of an obstacle. In addition tokenization provides transparency in these types of investment models because blockchain technology is often used. This decentralized application also ensures considerable cost savings and efficiency in the investment area. The Blockchain technology is therefore the ideal application for converting tangible and intangible assets into tokens.
A good example in this area is the offer of Immotoken. With an Immotoken you become a part owner of the property. And can therefore profit from the rental income of the property and the possible added value of selling the property in the future. In this way investing in real estate is made tangible. Safe and above all accessible. In addition it can generate a nice return. The investing in real estate this makes it an excellent alternative to the options offered in the traditional financial sector. After all in this sector saving money nowadays yields little or no return!
The potential of tokenization
The potential of token technology is enormous. This highly efficient digital solution to existing financing methods and the emergence of entirely new models for financing and collaboration has become widely accepted as a reliable approach to isolating data in ecosystems. Of course, the introduction of blockchain technology plays a major role in the ever-increasing potential of tokenization.
In principle blockchain tokens offer a digital representation of the specific value that the tokens represent. This is visualized in a highly transparent manner. The use of a decentralized system also immediately leads to considerable cost savings. After all no use is made of the services of a central intermediary or agency. The system is managed by the users themselves. The transactions are therefore verified by the connected computer systems making it virtually impossible to commit fraud. After all the blockchain technology is shaped by a chain of blocks of information that follow one another. Read more about the impact of blockchain on the real estate tokenization sector.
Emergence of tokenization
In order to illustrate the rapid rise of tokenization, we do not have to go back very far in time. At the speed of the digitalization of society, new applications are also being introduced. Tokens were originally introduced as a unique data security mechanism. The financial services industry was quick to exploit this capability to secure confidential information such as credit card numbers, personally identifiable information and financial statements. This sensitive information from users was converted into a token using a strong mathematical encryption consisting of an unbreakable string of numbers, letters and other characters. Following in the footsteps of the financial sector, the medical sector also decided to use tokens in order to store medical data in the most secure way possible.
Applications of tokenization
The applications of tokenization today are manifold. In addition to the use of this technology in the financial and healthcare sector. It can also be used to tokenize immaterial assets where no physical object is available for representation. Examples are copyrights and patents.
In addition, this technique can be used for fungible assets i.e. assets that can be replaced by a similar object. Well-known examples of this are wheat and gold. In that case the use of fungible tokens (FTs) is involved. Finally tokenization is a very interesting application for financing non-fungible assets. Non fungible tokens (NFTs) represent (as the name implies) the value of non-fungible assets. These are assets with a value that cannot be split up into smaller parts. Tokenization is an application that well is possible. The tokenization of real estate is a good example of this.
How does tokenizing work?
In order to give you a good idea of how tokenization works. We once again turn our attention to the offerings of Immotoken. The idea behind the concept is simple: you invest in a part of a flat and rent it out. After a number of years the flat is sold and you receive part of the added value. The strength of the concept lies in its simplicity. Every euro invested is guaranteed by real estate. An Immotoken yields as much as a classic real estate investment. The great advantage of this form of tokenization is that you can already investing in real estate with a limited budget.
Before you make the investment you will receive extensive documentation on the property itself as well as read the general and legal terms and conditions. This way, nasty surprises are avoided afterwards. You can follow your investment online in a simple manner.
Personal information is of course sent to you by e-mail. Perhaps the most important thing is that you receive your monthly rental income and this is often much higher than the current interest rates that the banks offer! This way tokenization becomes very interesting!