How Asset Tokenization is Changing Our Record Of Ownership

The ability to represent the ownership of real world assets on a blockchain would not only disrupt the way we manage and record the ownership of assets, but the way we perceive and interact with ourselves.

Asset tokenization seems to be one of the most promising blockchain implementations, especially after the fall of ICOs (Initial Coin offering) in late 2018 and the rise of STOs (Security Tokens Offerings) commonly referred to as "The New ICOs".

Tokenization is simply the creation of asset-backed-tokens by representing real life assets such as shares, bonds, land ownership... as digital tokens.

There are about four main kinds of tokens :

Payments or Platform Tokens : These are cryptocurrencies used as a means of payment in the digital space, the likes of Bitcoin, Ether, Litecoin ...

Utility Tokens : These tokens are simply app coins or user tokens. They enable future access to the products or services offered by a company. Therefore, these tokens are not created to be an investment and does not require strict levels of compliance. This is very rampant in the world of ICOs i.e Filecoin

Security Tokens : This is refers to tokens whose value is derived from real physical entities. i.e Company shares, Real Estate, Certificates, Bonds, Money etc... Security tokens are a liquidized form of a real-world asset, therefore, these tokens are subject to federal laws that govern securities in their base of operation and must be compliant.

Collectible tokens/Non fungible tokens (NFT) : A crypto-collectible is a cryptographically unique non-fungible digital asset. Unlike cryptocurrencies, which require all tokens to be identical, each crypto-collectible token is unique and one can not be equally exchanged for another. i.e Cryptokitties, Decentraland
With tokenization, an owner of a masterwork painting could offer digital shares of ownership in it. The fractional owners would benefit from buying or selling their digital shares to take advantage of rising or falling prices. As a digital security, it can be quickly and easily traded online with transparent evidence of how it moves from one owner to another.

Use cases :
A luxury Manhattan condo development is getting a new digital home on the worldwide Ethereum blockchain. The building, a completed 12 unit construction with 1700 sq ft units located on 436 & 442 E 13th St in the East Village, is the first major asset in Manhattan to be tokenized on Ethereum. The property has recently been appraised at more than $30M. New York’s $30 Million Housing Development Up for Grabs on Ethereum , Forbes : $30M Real Estate Property Tokenized With Blockchain.

Another use case is what SpaceBit are on to. SpaceBit, a decentralized space company aims at involving the average man in space matters by using blockchain to enable funding mechanism, especially by tokenizing already existing space assets and creating a market place for it, this means anyone anywhere in the world could own a fraction of a space asset simply by purchasing such tokens.

Asset tokenization is still very under explored, as there are about $256 trillion of real-world assets, ownership of these assets are still recorded and identified by papers and are highly not liquid. However, with the advent of tokenization, the way ownership is recorded and transferred will continue to move from analogue to digital.

Key Benefits of Ownership Tokenization :

Fractional Ownership : Ownership of anything can be tokenized and each token representing a fraction of ownership which can be transferred easily without any necessary physical transfer of the asset.
Liquidity : This allows for easy trading of assets, as the asset are represented with tokens and this tokens can be easily traded.
Immutability : Ownership and transfer of tokenized assets can be done with provable history of how such asset has changed ownership over time saved in a decentralized immutable ledger, eliminating any illegal claim of ownership.

In conclusion, tokenization is presenting a whole new world of asset liquidity and ownership, a world where people from all corners of the globe can trade anything and everything ranging from fractional ownership in a musical album release in Africa to a Berlin office building. Any asset can be made liquid and tradable.

Further reading :
[https://blog.softwaremill.com/asset-tokenization-on-blockchain-will-disrupt-the-asset-management-landscape-befbd71639b1](Asset tokenization on blockchain will disrupt the asset management landscape)

[https://medium.com/@bitcurate/scams-and-hacks-spur-industry-innovation-the-rise-of-security-token-offerings-stos-fdcc8bf8c679](The Rise of Security Token Offerings (STOs))