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What Tokenization has to Offer Capital Market Firms?
Tokenization is now a buzzword in the capital market industry. Read more about it here.
FERMONT, CA: Streamlining capital market transactions and asset allocations, tokenization is essentially an ideal solution to shape the capital market operations. Tokenization can have a huge impact on investment and trade. Tokenization also promises increased liquidity, transparency, the potential for exchange, and integrity of data.
Tokenization has the ability over some time to increase asset value. Here is an example showing the statement above. Let's assume the current market value of a property is $300,000. To raise capital, the property owner decides to identify the property. Asset tokenization converts the asset into digital tokens.
Given that each tokenized share is worth $30, each token will represent 0.01 percent of the total asset's shares. This will be achieved through a blockchain network by investors interested in buying digital stocks. Thus, property tokenization will open up opportunities for common masses to invest. New players' entry would increase supply, resulting in higher property prices due to an increase in capital availability.
Large-value investments such as gold, real estate, and fine art pieces are currently limited by geographic region as well as individuals' wealth availability. Tokenization will remove territorial boundaries and financial status limitations. For example, a Hong Kong investor will be able to invest in a New York building supported by absolute security and transfer facilities provided by the blockchain network. Also, tokenization will also eliminate intermediaries, such as brokers from third parties. Diversity will gain the investment profile as tokenization will enable investors to invest in different markets. The fractional ownership of different properties will allow investors to distribute risks across the various assets that are owned.
Blockchain is the future of several sectors, and one area that can benefit greatly from its development is the capital market.
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