Commentary: Tokenization is a life-saving pill to solve the problem

When the topic of financial markets and their future is raised, the introduction of blockchain technology and asset tokenization are often mentioned. In light of the progressive digitalization of many industries, this technology has the potential to democratize investment opportunities, unlock new financial opportunities, and thereby revolutionize the global economy.

This is a promising avenue to explore, as the future of money is sure to be diverse and geared towards satisfying any number of needs from different audiences. It is unlikely that there will be a universal platform or solution.

Let's take a closer look at the premise of tokenized assets to understand why they can fundamentally change the way people approach finance around the world.

The general premise of tokenization involves giving people much greater access to wealth and financial opportunity by introducing the concept of fractional ownership of assets. In other words, investors can buy a portion of a high-value asset instead of buying everything that may well be beyond their financial means.

Let's look at a practical example: Rising real estate prices over the years have made it increasingly difficult to access affordable housing. In the UK, it has already become so expensive that it has become a privilege available only to those with ancestral wealth from their parents to rely on.

By digitizing and separating properties into tradable tokens, ownership shares can be split, allowing people to invest in parts of a property rather than buying it in its entirety. This democratizes access to affordable housing by lowering entry barriers and providing opportunities for investors with limited financial capacity to enter this market.

The same principle applies to other sectors: as it becomes easier for people to buy, sell and trade fractional ownership of assets, tokenization serves to overcome entry barriers and provide greater financial opportunities to a wider range of audiences. This includes millennials and Gen Z investors, who often get the short end of the stick when it comes to the complexities of traditional financial markets and prefer to deal with digital assets over real ones.

In addition to introducing new investment opportunities, tokenization can also increase the transparency and efficiency of financial transactions. The use of blockchain means that all relevant transactions take place on the network with an immutable and transparent record of all events. This ensures that asset ownership can be easily secured and verified, eliminating the need for intermediaries such as brokers or custodians, reducing costs and streamlining operations for both individuals and businesses.

In cross-border transactions, it can remove third parties, such as banks and payment processors, commonly involved in making international payments. Using the blockchain, tokenized assets can be transferred directly between parties, thereby reducing transaction costs and processing time. It also provides a higher degree of security and trust since, again, the blockchain records all transactions in a decentralized and immutable manner.

In addition, since tokenization involves representing real assets as digital tokens on a blockchain network, it will revolutionize the way payment providers collaborate. These providers can use standardized smart contracts and open networks to manage the terms of transactions and easily exchange tokenized assets between different payment providers.

Connecting previously disparate payment systems enables faster and more cost-effective cross-border payments and facilitates collaboration between payment service providers in different regions. I believe that asset tokenization can be a game changer in the cross-border payments phase as it can enable the financial industry to work as a united front on a global scale.

Thanks to the advent of blockchain technology, the future of money will be very diverse. As more players are able to enter the financial markets, there will be new opportunities to satisfy them.

Using blockchain technology as the underlying infrastructure, cryptocurrencies and tokenized assets can enable secure, transparent and immutable transactions, providing trust, eliminating intermediaries and greater financial autonomy.

Also, since assets from any industry can be tokenized, people will be free to customize their financial interactions to suit their specific needs and preferences, and that’s it. this without losing the efficiency or speed of its transactional operations.

Blockchain integration promises financial diversity far beyond what fiat currencies and traditional financial assets can offer. The potential for innovation in this area is enormous. I believe this will empower people to have greater individual control over their wealth and engage in limitless transactions in previously unimaginable ways.