What Is Asset Tokenisation?
Digital asset tokenisation is the process whereby ownership rights of an asset are represented as digital tokens and stored on a blockchain. In such cases, tokens can act like digital certificates of ownership that can represent almost any object of value, including physical, digital, fungible, and non-fungible assets. Because they’re stored on a blockchain, owners can maintain custody over their assets (if owners are holding them in their own secure crypto wallet).
If the long-term promise of this use case is impressive, so too are the strides toward adoption already being made today. Some of the biggest enterprises such as Boston Consulting Group and ADDX, BlackRock, Deloitte, BNY Mellon, and EY, have studied asset Tokenisation and concluded that it possesses the capacity to disrupt multiple industries, including the global securities industry. Additionally, Microsoft and Vanguard have announced or gone live with projects tokenizing industrial assets and securities, respectively. By these metrics, asset Tokenisation is already among the most popular blockchain use cases currently achieving real-world enterprise adoption.
Asset tokenization examples include:
1.Real-world asset tokenisation: Real-world assets like fiat currency, equities, T-bills, credit, commodities, carbon credits, intellectual property, and fine art can be tokenised and stored on a blockchain. Similar to gold bullion warrants and house deeds, they’re bearer assets that give the holder a claim over a real-world asset. The key difference from legacy bearer assets is that physical asset tokenisation enables assets to be stored, traded, and used as collateral across blockchain networks.
-
Digital asset tokenisation: Tokenising assets that only exist in a digital form on a blockchain network is critical to Web3, especially for use cases such as representing DAO governance rights and cross-chain assets. Because they’re entirely digital, tokenised assets stored on a blockchain enable the owner to hold the asset outright, rather than owning a claim on the underlying asset.
-
In-game asset tokenisation: A subset of digital asset tokenisation, in-game assets used in GameFi projects or metaverses, such as skins, weapons, or in-game currencies, can be represented as tokenized assets.
Benefits of Asset Tokenisation
In addition to offering a decentralized and trust-minimized alternative to a real-world product, investment vehicle, or service, there are many more benefits of asset Tokenisation. Specifically, the Tokenisation of real-world assets through the use of blockchain technology presents a clear path toward making numerous assets more valuable, accessible, and useful, as well as creating a vehicle by which off-chain data can augment their utilization within the DeFi ecosystem.
At the heart of both the current success of asset Tokenisation and its long-term potential is the remarkable number of advantages and additional utility that tokenized assets provide relative to non-tokenized assets. Tokenisation can allow for increased liquidity of traditionally illiquid assets; greater accessibility and ease of access for otherwise cloistered investment opportunities; greater transparency regarding ownership and ownership history; and a reduction in administrative costs associated with the trading of these assets, including management, issuance, and transactional intermediaries. Finally, Tokenisation allows for assets that previously could not access the DeFi ecosystem a path toward doing so, unlocking a whole new realm of potential through asset-backed composability.