Globally accepted asset classes included only a handful of instruments like gold, silver etc up until now, but as tokenization is stepping in, new kinds of asset classes are coming up unlocking new forms of investment and trading opportunities.
“I believe we have hit a new junction in tokenization that is leading to a newfound way of creating a range of new asset classes that will revolutionize how we can invest.” Steve Good, a social influencer and a crypto adviser, talked to BlockPublisher.
Tokenization is forming a local network pertaining to a specific asset class where a specific token is the representative of value. It provides the investor community to step into the new investment game as tokens are being used as equity or traded instruments, allowing fractional ownership of an asset. It also makes access to various assets easier, as seen in the case of real-estate where it is leading to make an illiquid asset (piece of land) liquid and tradeable. Tokenization exposes the masses to a wide variety of investment opportunities. Steve further said;
“We are onseeing a range of derivative tokens being created. Some examples include creating tokens that back the assets rather than the assets backing the tokens, we are seeing various bond instruments appear on the market and are seeing token models where we truly treat the token more like an equity or traded instrument which however is not in any way connected to dividends, profits, revenues or voting rights. These fundamental shifts are going to create an opportunity for a variety of bankers and institutions to create a variety of exotic instruments for trading which I believe will eventually become more widely adopted and traded”.
Tokenization is already set to revamp platforms like YouTube, Twitter etc. and moving forward into the future more and more areas of life are expected to get affected by it with the investment arena being the most important one of them. The importance lies in the fact that tokens provide an alternative way for the investors to invest and store their assets. This ultimately paves the path for more global adoption of tokenization and blockchain overall.
“Ultimately the answer is not to tokenize every asset, but we are now seeing a profound shift in how we can utilize tokens to create a wide variety of derivative instruments for trading which will create more engagement and adoption globally.”, said Steve.
The bear market of 2018 saw a focus shift to the regulatory oversight for cryptocurrencies. STOs, short for security tokens offerings, are now being deemed the future of this arena. Securities or stocks are financial instruments representing assets in the real world. Whenever a security is purchased, the transaction is signed on paper. For security tokens, the scenario is the same except that the transactions are recorded on a blockchain. Being securities, the tokens also fall under the regulations and laws of the traditional financial world. Explaining tokenomics and how STOs are considered the future, Steve said;
“If you look at the first wave of tokenomics models, it was very much driven around a specific activity of creating coins for spending within platforms which also had a dual purpose to be traded on exchanges. Roll forwards to 2018 and we faced a bear market, regulatory worries and a shift in sentiment to STO being the solution to our future.”
The tokens were mainly used for application in a particular ecosystem, initially. CryptoKitties is an example of non-fungible tokens that are not interchangeable and can only be used within a specific network. The tokens used in CryptoKitties are non-fungible, meaning they cannot be cashed out and cannot be exchanged for another token. After this phase came the aspect of trading these tokens for money or some other asset in another network or exchanges.
It’s still early in the blockchain and tokenization world and it seems that exciting times lie ahead. Tokenization is disrupting various areas with the possibilities that it provides and the investment arena is seemingly the next one of these. Tokenization is surely set to open up new horizons and investment opportunities for the masses moving forward.