top of page

Tokenization: A New Horizon for Blockchain

Aktualisiert: 19. Okt. 2023







In the ever-evolving world of finance and technology, the concept of 'Tokenization' is becoming increasingly vital. Ecrop recognizes the importance of staying ahead in this rapidly changing landscape, and we've taken a deep dive into McKinsey & Company's enlightening report, 'What is Tokenization?' (Click for the original article).

Our mission is to simplify this transformative concept, providing you with a concise takeaways to make the complex simple and clear.
Here are the takeaways:


 


1️⃣ What is Tokenization?


Tokenization refers to the digital representation of an asset on a blockchain. These assets can include physical, financial, or non-tangible assets. Despite its introduction in 2017, tokenization hasn't caught on significantly. However, some progress is noticeable. For instance, fintech infrastructure firm Broadridge facilitates over $1 trillion monthly on its distributed ledger platform.






2️⃣ Potential Benefits of Tokenization for Financial Service Providers


Tokenization promises to revolutionize financial services and capital markets by allowing asset holders to take advantage of blockchain's perks such as 24/7 operations and data availability, faster transaction settlement, and high automation levels. Potential benefits include quicker transaction settlement, operational cost savings, democratization of access, enhanced transparency through smart contracts, and cheaper and more agile infrastructure.






3️⃣ The Tokenization Process (4 Steps)


Asset sourcing: This first step involves identifying how to tokenize the asset, considering its treatment as a security or a commodity and relevant regulatory frameworks.


Digital asset issuance and custody: The physical counterpart of the digital asset is moved to a neutral secure facility. Then a token, network, and compliance functions are chosen to create a digital representation of the asset on a blockchain.


Distribution and trading: Investors need to set up a digital wallet to store the digital asset. Depending on the asset, a secondary trading venue may be created.


Asset servicing and data reconciliation: Once distributed to the investor, the asset requires ongoing maintenance, including regulatory, tax, and accounting reporting.








4️⃣ Is the Time Right for Tokenization to Catch On?


While approximately $120 billion of tokenized cash is now in circulation in the form of fully reserved stablecoins, tokenization still isn't happening on a scale that could be considered a tipping point. However, several factors may accelerate its adoption. The higher interest rates of the current cycle are improving the economics for some tokenization use cases, particularly those dealing with short-term liquidity. Additionally, many financial services companies have grown their digital asset teams and capabilities over the past five years, which could lead to increased use of tokenization in financial transactions.



 




As we prepare for the era of tokenization, it's essential to understand its potential. The full report by McKinsey & Company provides an in-depth exploration of this transformative concept. By embracing tokenization, we're stepping into a new digital frontier, where assets can be exchanged, accessed, and managed more efficiently and transparently. To delve deeper into the report and discover the nuances of tokenization, read the full article here.



And Ecrop🌐 stands at the forefront of the crypto securities sector, redefining the landscape with its innovative end-to-end solutions. By leveraging our strategic digital marketing and engagement strategies, we aim to revolutionize how businesses raise capital, offering them unparalleled flexibility, cost-effectiveness, and transparency. Join us in this journey as we continue to push boundaries, create opportunities, and set new standards in the crypto securities market.




17 Ansichten0 Kommentare

Aktuelle Beiträge

Alle ansehen

Comments


bottom of page