Tokenization: the 360° transformer for better banking

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Tokenization is the act of digitally representing ownership of objects and possessions in the real world. Stablecoins, such as ARYZE´s Digital Cash, represent cash 1=1 backed by government assets. For example, representing the US-Dollar or more traditional assets such as gold through tokenization can be done via a central office (e.g. an institution in the form of a trustee or auditor) that binds the tokens on the given blockchain to the assets in the real world.

Blockchain’s ability to tokenize assets is beyond our imagination, but the assets can be commonly grouped into three broad categories – intangible assets, fungible assets, and non-fungible assets.

Source: Keensighters

Tokenization democratizes access to opportunities

It is estimated that by 2027, USD 24 trillion worth of bankable assets will be tokenized. Blockchain technology will allow reduced issuance costs and immutable audit trails that improve overall accountability through authentication links to verified digital identities of natural and legal persons. Likewise, it would make possible the daily trading of markets, increasing volume and liquidity while reducing costs. A great example of how tokenization democratizes access to opportunities is seen in the art world. Companies like Masterworks provide fractional investing in high-end art (Renoir, Picasso, etc.), securitization, rationalization, and democratization of the upper end of the art investment class.

tokenization

Source: Finoa

Anything with tradable value can be tokenized

The STO (Securities Token Offering) market is here to stay and will certainly be bigger than anything else we see today. Entrepreneur, financial synergist, and ARYZE Advisor Peter Kristensen believe that anything with a tradable value can and will be tokenized as long as there is a demand to trade it. DLT and smart contracts have also enabled the securitization of non-bankable assets such as luxury goods, fine arts or gemstones. For example, a company like Idoneus; a digital marketplace that makes it simple and secure for luxury assets, goods, and services to be purchased, sold, rented or otherwise experienced. 

A project like Idoneus is very interesting because if we look at it today, we are probably going back to something similar to the old barter trading but with a blockchain component. That is a bit like blockchain in the sense that it is an instant settlement, Idoneus is a project reinventing access to and the value of luxury, making it simple and easy for luxury assets, goods and services to be purchased, sold, rented and more via the Idon token based on blockchain technology.

Peter Kristensen, Co-CEO of JP Fund Services Fund and Senior Advisor, Investor Relations of Idoneus

Banks can use tokenization to their advantage

The world of payments and money transfers will undergo significant changes in the next few years. It will transition to much cheaper and more efficient solutions based on Cloud Native Core Banking solutions and distributed ledger technology, enabling the tokenization of assets. The B2B2C model of ARYZE is a retail client acquisition model through highly efficient and cost-saving solutions enabling, among other zero cost global transfers of money for businesses and individuals, combined with new and innovative functionalities set in subscription models offering about 75% cost saving for business payments and transfers.

Some banks such as BBVA are already looking into the benefits of tokenization. One of their focus areas is payments tokenization: a new payment method that replaces sensitive debit or credit card data with a unique identification code called a ‘token,’ which is used during a digital transaction. According to BBVA, in the future, the plan is to provide customers with total control over their tokens on any platform or via any digital payment method, whether they be virtual wallets, wearables, or devices connected to the Internet Of Things (IOT).

Check out our blog or visit our website to learn more about ARYZE, crypto, blockchain, and tokenization. If you liked this article, please comment and share it with your network.

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