What is tokenization ?

The term "tokenization" has become popular several years ago and is used in various circles of society. Not only the cryptocurrency community recognized that by creating tokens based on blockchain technology, it is possible to digitize almost any asset.

What is tokenization?

Tokenization is the process of converting real-world assets into digital tokens that are then stored on the blockchain. Such assets can include securities, currencies, investments in companies or projects, loans, precious metals, or shares in real estate.

Usually, tokenization serves two separate purposes. On the one hand, it helps avoid the use of intermediaries, which can reduce transaction costs. On the other hand, it allows for convenient trading of illiquid assets.

Functions of tokenization:

–Reducing intermediaries

–Increasing asset liquidity

The first function of tokenization is to reduce the number of intermediaries, which is particularly important when issuing tokenized securities. Unlike traditional financial instruments, where asset issuance requires a bank-payment agent, depository, and other intermediaries, these intermediaries are not required when issuing tokenized securities. A company seeking financing can directly sell tokens representing the value of the investment to investors providing capital. The token itself is stored in the company's wallet.

The second task of tokenization is to turn illiquid assets into liquid ones, i.e. prepare them for fast and easy trading. For example, physical gold bars or shares in a multi-apartment building are harder to trade than tokens.

Constraints and Requirements.

The constraints on tokenization mostly depend on economic, tax, and accounting factors. Once the asset to be tokenized is identified and tax and accounting issues are resolved, there will be no obstacles to implementation. This requires the fulfillment of two conditions.

Steps of Tokenization:

–Token Generation on the Blockchain

–Linking to the Asset

First, the digital asset is created technically by publishing a smart contract on the blockchain, which then creates and manages the desired amount of tokens. These tokens should represent the desired asset in digital form.

In the second stage, it is necessary to establish a connection between the digital image and the real asset, which is a real problem and represents a bridge between the digital and real world. The token holder must be identified in such a way as to have the right to claim the tokenized asset, which can be used in the real world under any circumstances. When developing the project, it is necessary to give the highest priority to the legal protection of the token owner, if you want to create a basis for long-term and sustainable development from the current trend of digitization to tokenization.

Practical Application

Many assets can be tokenized, making them easy to trade on exchanges. Token issuance can also be an effective financing tool for companies of various sizes and stages of development. However, knowledge of technology, tax, and legal regulation is required for tokenization.

An excellent example is the Quicktoken project, which allows financial assets to be tokenized through its platform. Quicktoken acts as a bridge between banks and investors in the world of cryptocurrencies. On the platform, banks can sell tokenized credit portfolios and scale up, while investors can earn passive income from investments.

What is the unique feature of Quicktoken?

Guaranteed Yield

Quicktoken creates balanced portfolios of assets with varying risks and yields. The result is guaranteed with the reliability of bank deposits, but with significantly higher yields.

Collateral

The Quicktoken platform and its tokens are backed by real financial assets. Each token is backed by a share of a credit portfolio issued by a bank or other organization.

Currency Income

Investor payouts are made in fiat currency. Thus, profits are not dependent on the value of the internal token.

"Tokenization is one of the most important steps in natural language processing. It allows converting text into a numerical format that can be used in machine learning models." - Jeremy Howard, founder of Fast.ai

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