The quintessence of tokenization

The applications of asset tokenization are endless and can be applied to a wide variety of assets, from real estate to valuable art collections, as well as intangible assets.

This wide range of tokenization possibilities provides investors with a extended selection of investment options at affordable costs, with variable investment returns that allow them the ability to evaluate the option that best suits their desired risk and returns profiles, without the availability of capital being an obstacle in the decision-making process. In other words, tokenization enables maximum diversification across asset classes in a way that is currently not possible for retail investors and small businesses.

Retail investors can now decide how to build their portfolio of digital assets. This degree of diversification translates to a more robust portfolio and where capital can be allocated to as many projects as the investor wishes without capital constraints.

For instance, large funds can diversify their portfolios, allocating a certain amount of capital, typically millions, to art or real estate (it is well known that art is uncorrelated to traditional equity markets). However, a retail investor is currently unable to allocate minimal capital to art; with asset tokenization, a retail investor could invest as little as 100 Euros in art if desired.

The correct use of technology can improve the efficiency of investing, by focusing on the customer’s journey, providing real-time information, verifiable, immutable, and transparent transactions, such as profit and loss, marking-to-market, and transaction history.

Another key advantage of digital assets that we wish to highlight is the simplicity with which they can be transferred from one portfolio to another, and from one user to another. This results in optimal liquidity, as you can buy and sell assets from user- to-user (peer-to-peer) simply by taking advantage of digital platforms that connect users and execute transference in seconds, at minimal/marginal costs and without the need for intermediaries.