In a nutshell, a token can be thought of as any object – physical or digital – that represents an underlying value. Tokens may be fungible or non-fungible.
The casino chips are tokens that represent the value mentioned on the chip. Their value remains constant irrespective of the history of that token, so they’re fungible. Your vehicle can be a token, although it is non-fungible as its value changes with the years used, miles driven, condition, etc.
In today’s digitally governed world where cryptocurrency is slowly taking over transactions, crypto tokens have become the new way to tokenize your assets. From CryptoKitties to gaming skins, trading tokens digitally has become an alluring investment for many.
But what is the tokenization of assets? What are its advantages? Should you tokenize your assets? In this post, we’re going to unscrew the world of trading tokens, and whether and how you should get started!
What is the Tokenization of Assets?
Very simply, when you put your asset – whether fiat currency, cryptocurrency, or any other capital – into a token, you’ve tokenized your asset.
If you go to a casino and exchange your cash for chips, you’ve tokenized your assets.
In the crypto world, if you purchase 3 CryptoKitties from the Ethereum coin, you’ve tokenized your asset.
Tokenization of assets is the process of transforming your financial assets into tokens – whether crypto or physical. However, the tokenization of assets within the crypto realm is a different function than that within the physical realm.
Crypto tokens are essentially blockchain assets. You can’t touch or feel them, but within the blockchain network, there is one block that denotes your ownership of a specific crypto token.
Tokenization of traditional assets such as real estate and securities over a blockchain network is also now possible on multiple Defi platforms. You can choose to liquidate these tokens, swap (give and take) them for other tokens on the network, or just hold ownership for as long as you like. But why would you want to convert your assets into crypto tokens?
The Advantages of Tokenizing Assets
Tokenization of assets has various advantages. As Defi eliminates intermediaries, the processing and other fees will be significantly lower than traditional asset trading.
Furthermore, the blockchain network guarantees full transparency. Delay in or stopping of the transfers are virtually eliminated, and it’s a faster and simpler process. The system provides greater security and reliability.
Moreover, investment in crypto tokens can promise great returns given the current interest of the public in the sector and the availability of liquidity providers. The potential for market manipulation is also significantly reduced.
If you’re interested in trading tokens, this is a good time! There are multiple Defi (decentralized finance) platforms today that allow tokenization of your assets among many other services.
An excellent example is KingSwap, a liquidity pool platform that allows you to easily convert your fiat currency to cryptocurrency, and buy, sell, and swap tokens on the network with your coins.
The platform also has its own token collectibles that are rewarded to liquidity providers, miners, and early users!
And there’s all you need to know to get started with the tokenization of assets. If you’ve found this post informational and charming, we’d like to know in the comments!