Tokenization on the blockchain has been quite in trend since 2018, but it is no longer limited to it.
Imagine you buy a real estate of $5000, but you want to start slow and investment steadily. Perhaps with a small investment, you want to start gradually.
Like, invest a few thousand in every 4-5 months. Obviously, it is not possible in the traditional real estate market.
How can you purchase some meters from your house, then again, some meters after a few years?
Now, let’s understand it this way. Say you have a property of $150,000 and you need instant money $10000. Can you get it?
Well, yes with tokenization!!! It is a method that transforms your asset into a digital token.
It will transform your property of $150,000 into token and issue it on a platform which supports smart contract where it can be bought and sold freely.
So, with every token, you buy 1% of the ownership on the asset.
Buy 75000 tokens and you own 50% of your property. Buy 150,000 tokens and you are the 100% owner.
Though you will not be the legal owner of the property as Blockchain is a public ledger, it promises that when you purchase token, nobody can wipe out your ownership, even if it is not registered under the government registry.
So, you take any asset, equity, or artwork, tokenize it and create its digital representation which lives on the Blockchain.
Based on Currency.com review there are also some challenges faced during it. The first is that a lot of countries don’t have specific rules for the cryptocurrency.
Hence, if the company buys the tokens of an asset, it will not get the legal rights on the property.
Hence legal help is needed to establish the tokenization of assets.
Another problem is that it brings you back to some type of centralization. The idea of blockchain is to develop a trust-less environment.
Though it may be possible with tokenizing digital assets, it will not be possible with physical assets.
However, even with so many challenges, companies are ready to tokenize their valued possessions, equity, and stock. The progress is very fast and soon these challenges will be dealt with.