Tokenized Securities Definition
Tokenized securities are digital assets which represent ownership of a real-world asset (like stocks, real estate, artwork, etc.) They exist on a blockchain, and their ownership gets openly verified, tracked, and traded on this decentralized ledger.
Tokenized Securities Key Points
- Tokenized securities are a form of digital tokens that operate on the blockchain technology.
- They represent ownership of a real-world objective asset and encase the benefits and rights associated with it.
- Tokenized securities enhance security, speed up the process and can reach a global market.
- They are governed by security laws in their respective jurisdictions.
What are Tokenized Securities?
Tokenized securities, by translating value of an asset into a digital format, can bring about a new era of accessibility, liquidity, and transparency to the traditional finance realm. It uses the inherent qualities of blockchain technology, like decentralization, transparency, and immutability, to bring new possibilities to the world of asset ownership.
Why are Tokenized Securities important?
Tokenized securities represent the convergence of the physical and digital worlds. By tokenizing traditional securities, barrier to entry can be lowered due to fractional ownership. This potentially could unlock tremendous amounts of latent, global capital. Furthermore, it can bring increased liquidity and trading efficiency due to 24/7 markets facilitated by blockchain.
Who uses Tokenized Securities?
Tokenized securities can be used by anyone who wants to invest in real-world assets such as stocks, real estate or fine art without dealing with traditional systems or intermediaries. They are particularly useful to people and businesses in countries with fewer financial options or infrastructure. In addition, they also have benefits for asset managers, brokers, and exchanges who are looking to cut costs and increase speed and reach of transactions.
When are Tokenized Securities used?
Tokenized securities are used when traditional forms of securities are either too expensive, too time consuming or too complicated. They are also used when businesses or individuals are searching for more versatile, accessible and streamlined ways to invest and trade in real-world assets.
Where can Tokenized Securities be used?
Tokenized Securities can be used or traded worldwide. Blockchain technology enables these transactions to occur on a borderless, always-open global market. Thanks to the internet, tokenized securities can be traded from anywhere in the world, regardless of geographical location.
How do Tokenized Securities work?
Tokenized securities work by dividing an actually physical asset into numerous virtual shares or tokens. They are created by establishing a set of rules for each token via smart contracts which automate buying, selling and ownership transition. A token holder owns a precise portion of the underlying asset and can trade the token on the open market. Moreover, all transactions are recorded on the blockchain so they can be easily validated and audited.
