The traditional process of investment in real-world assets (like gold and house) has always been a challenging task (forgery, duplication, fraud, traditional outdated practices, middlemen the challenges are numerous)
While some digital solutions are easily adopted by businesses and existing regulatory frameworks, others require a deeper understanding of the underlying technology itself and the implications associated with them.
One such term is Asset Tokenization.
In the most abstract form, tokenization converts the value stored in a tangible or intangible object into a token that usually can be manipulated along with a DLT/Blockchain system.
Tokenization can turn almost any asset, either real or virtual, into a digital token and enables the digital transfer, ownership and storage without the necessary need of a central third party/ intermediary.
Even though the same can be done through multiple software, the fact that a token runs on Blockchain differentiates it from other digitization methods. Using a Blockchain to create a digital token enables the collaboration of different companies, which in turn allows the aggregation of otherwise fragmented information into one digital token. Moreover, all parties can update information seamlessly and verify its correctness.
Asset Tokenization is the ideal solution for all the problems including documents update, duplication to forgery.
From Precious Metals to Licences and Real Estate – the World Gets Tokenized
Let's understand how Asset Tokenization will impact the real estate sector.
Property tokenization is one of the most promising use cases of blockchain technology. With a total asset value of $228 trillion globally, real estate is a more valuable asset class than bonds and stocks combined.
Despite the enormous market size, real estate is still an illiquid asset class with high barriers to entry.
Example: Suppose the price of a house is worth 100$ Million, but the buyer can afford to only invest 5000 dollars at present, but the traditional system won’t allow the buyer to make an investment with such a small amount.
Here comes the benefit of asset tokenization which will divide the property into tokens and allows the investor to purchase tokens worth 5000$ which allocates him a small percentage of ownership in the asset.
Through blockchain, it is ensured that after a token is purchased users cannot delete ownership. Hence, the digital representation of a physical asset has increased liquidity, faster transactions and better settlements.
Real Estate will be the highest gainer of asset tokenization, as it makes the process of investing seamless by not involving any intermediaries. Moreover, this also allows anyone to invest any amount which expands the investor base.
However, Despite the ever-growing interest in Blockchain Asset Tokenization, the world is still slow to adapt to this phenomenon.
Let’s consider some challenges and barriers standing in the way of tokenization and how they can be overcome in the future.
It is necessary to solve some problems before real-world assets are tokenized on blockchain.
Legal and regulatory issues: Every country follows different rules and regulations, to overcome this challenge local and global policymakers along with the financial institution must coordinate to develop a framework that must cover all the relevant aspects of asset management.
Business Partnership and right kind of collaboration: The organizations which wish to implement asset tokenization must search for legal advisors, financial partners and technical developers who are very well versed in implementing blockchain, smart contracts and digital tokens. Plus, the process itself is difficult, extensive and time-consuming.
Not immune from attacks: With the growing business of cryptocurrency, there is also the risk of cyber hacks. In 2017 when digital payments reached billions, cyberattacks increased at a high rate. Although distributed ledgers provide a high level of security, still there exist some weak points in the ecosystem which must be secured.
The Opportunity that Archethic (public blockchain by Uniris) Presents in the field of Asset Tokenization
Archethic network provides security beyond known solutions, as it has been designed to provide a significant improvement in IT security for users (biometric identification without any key storage), and also to significantly improve security on decentralized networks without affecting the fundamentals. There is 0.0000001% risk of fraud even with 90% of malicious nodes. Besides security concerns, there are always sustainability and scalability concerns.
Sustainability: Archethic consumes 3.6 billion times less energy than Bitcoin, each Archethic transaction requires only 0.42w of energy making it the best platform for such use cases where sustainability is of utmost importance to enable mass adoption.
Scalability: Archethic architecture is designed to provide linear horizontal scalability. Given enough nodes, we can even target 1 Million TPS.
The tokenization of assets is not the future - it is the present. It is deeply transformative and is offering exciting possibilities but for any new technology that simplifies ownership and transaction becomes a known phenomenon only when it is simple, secure and sustainable to use and drives mass adoption ( Ex: WhatsApp/ Visa/ Mastercard)
We are building a Public Blockchain that truly brings all these principles together and drives mass adoption.
Feel free to contact us or drop an email at and we’ll tell you more about how we can help you when it comes to Asset Tokenization.
Archethic Public Blockchain
Archethic is a Layer 1 aiming to create a new Decentralized Internet.
Its blockchain infrastructure is the most scalable, secure & energy-efficient solution on the market thanks to the implementation of a new consensus: "ARCH".
Archethic smart contracts expand developers' boundaries by introducing internal oracle, time-triggers, editable content & interpreted language.
Through native integration for DeFi, NFTs & decentralized identity; Archethic offers an inclusive and interoperable ecosystem for all blockchains.
In order to achieve the long-term vision of an autonomous network in the hands of the world population, we developed a biometric device respecting personal data privacy (GDPR compliant).
Making the blockchain world accessible with the tip of a finger. Be the only key! https://www.archethic.net/
Archethic Foundation Non-profit in order to manage decentralized governance of the public blockchain