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Asset tokenization refers to the usage of digital tokens to indicate asset ownership. These assets could range from real estate, fine art, and jewelry to smart contracts on a blockchain (to handle these ownership rights). Asset tokenization opens up investment opportunities to a class of investors who otherwise may not have had the option.
What are the features of tokenization, you might ask.
Tokenization implies management of account
Tokenization renders accounting systems secure, in comparison to conventional database records
Tokenization means that a blockchain ledger is the source of data
The following are the key benefits of asset tokenization:
Enhanced liquidity of assets as a direct outcome of reduction in trading friction
Improvement of investment attractiveness
Capability for immediate audit for regulators and compliance procedures
Reduction in cumulative ownership cost of the accounting system