Tokenization, Securitization and Security Tokens.

Tokenization is a new word, which describes a new way to raise money using cryptocurrency, during which the project creator creates tokens which represent a share in a physical asset, and investors trade fiat or cryptocurrency for these tokens.

Tokens secure partial ownership.
This is a special type of ownership, which is also called fractional ownership, Which isn’t new, but the process which creates the fractional ownership is new. That makes this special.

Why? Because the method creates larger and more diversely located pools of investors...

It allows much broader investor access to investment in extraordinarily expensive assets like rare art and unique buildings or resorts. Traditionally there are maybe 100 potential buyers for assets valued above a couple million dollars, even if the potential ROI is 200 to 300%. It’s just to high a price. But once you cut the asset into a thousand, ten thousand or even one million pieces you have a lot more investors, who can afford to invest in a smaller portion.

But there are always geographic restrictions which may still limit the number of potential investors. But when something is a blockchain Token it’s accessible to Token investors all over the world, so national, geographic and political boundaries become porous and in many cases nonexistent.

While real estate represents the worlds largest asset class, Art represents another type of asset with previously untapped equity. But now the famous art by Andy Warhol and Monet have been tokenized for fractional ownership, along with major real estate deals and the world is taking notice.

Securitization

Another term for this process is securitization and a new verb is securitize Tokenization is the process of converting rights of an asset into a Token. The value of the token is the asset. In financial terms the token is collateralized by a securely held asset, taken into custody or other wise secured by a custodian to protect the investor. Thus another name for this Tokenization process is called securitization. They are also called security tokens

These tokens are secured through one of the core characteristics of blockchains; “immutability” the unalterability of the ledger of a blockchain. Plus these tokens are tradeable via cryptocurrency exchanges or other Trading Systems (ATS).

This new development started with 7 companies doing Tokenization in 2018 and now there are almost 100 companies providing platforms for not only real estate Tokenization, but also the Tokenization of Art. One such platform is Centrifuge.

Centrifuge

Centrifuge is an asset tokenization platform which specializes in assisting it’s customers convert real world assets into nonfungible tokens so the assets can enter the blockchain universe through Tokenization. Then these assets can be used as collateral for lending and other “DeFi” or decentralized finance uses.

Centrifuge is used by its customers for the tokenization, underwriting, and securitization of all kinds of documents (invoices, mortgages, other “contracts”, etc) to exchange their data in a provable, unalterable way, and finally provide financing.

Centrifuge is a two-layer solution:
The first layer is the Centrifuge peer-to-peer network for private, secure data exchange. The second layer is where the smart contracts deployed on Ethereum that represent business identities, document hashes and most importantly the “Business NFTs” to represent documents live, and in a form which makes them financeable via MakerDAO, Compound, or others.
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Written by Shortsegments. ✍🏼

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Tokenization, Securitization and Security Tokens.

Shortsegments is a blogger or writer on social media application or platforms, some of which are running on blockchains. A decentralized application or a decentralized platform, means there isn’t a central authority or owner to take your account away from you and your account can’t be deleted. You are the owner of your account and these platforms are censorship resistant. In contrast, centralized platforms have a central authority or owner who can freeze your account, hide your content and delete your account and all your content. Examples of centralized platforms include Facebook, Instagram or YouTube.