Tokens and digital assets: false promise or real opportunity for fintech?
Tokens and digital assets: false promise or real opportunity for fintech?

Tokens and digital assets: false promise or real opportunity for fintech?

By Contest Writer - 7 Jun 2020

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In the fintech world, we hear ever more frequently about new solutions and developments for the economy 3.0. and for some time now the term tokenization, i.e. tokens that represent real assets in digital format, has become more and more widespread among enthusiasts and insiders.

What are tokens?

Tokens are a digital representation, not reproducible, of a particular resource destined to a specific use

Thanks to blockchain technology, these tokens can be sent from one electronic wallet to another. 

It is worth recalling that the blockchain is essentially a decentralized ledger where all transactions, from the first to the last one, are recorded. 

Fintech in everyday life

Many of us have used this technology in our lives in the past, even if not digitally, just think of the supermarket’s stamps that customers receive to be able to get, after completing the card, a prize or a specific bonus. 

Digital assets are nothing more than the evolution of this old and outdated system, while retaining similar characteristics like, for example, the stamps that could not be copied or reproduced and could only be used within their scope of application. 

We have seen that tokens can be a digital representation of a certain asset and can be used, for example, to divide and represent a certain share of property of a certain asset, we are talking about security tokens. 

Imagine issuing a precise number of digital tokens, where every single token represents a share of ownership of the underlying asset and where the entire amount of tokens issued represents its total ownership. 

Tokens as an investment method

Given this premise, there are infinite possibilities for tokenization, for instance for investment purposes: tokenization can be applied to works of art, luxury cars, precious objects and gems.

This system gives the possibility, even to the small investor who cannot afford to buy an entire asset, to take possession of a small part, for example, of a famous painting. 

The part of the property purchased will be represented digitally by the token stored in the wallet; the tokens, thanks to special exchange platforms, can then be freely purchased and sold among users around the world.

Another very interesting use case could be in the real estate field: it is already possible to buy a share of a specific property in any part of the world and automatically receive a portion of the income generated by the property itself based on the number of tokens owned; all this is automatically managed in a precise and transparent way by smart contracts. 

When the user wants to liquidate their investment, they will be able to sell their assets that represent the share of ownership and wait for an investor to buy them at the price set, all in an instant and at a cost of a few cents to pay the transaction fees from one wallet to another. 

This process, given its extreme ease and speed of use, taking into account a worldwide pool of potential users, brings a massive injection of liquidity in all markets where tokenization can be applied. 

This will open the world to new technological developments and new job opportunities to be seized, provided that there are clear and favourable regulations for this innovative process. 

Emanuele Ferrari

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