Asset tokenization is a relatively new phenomenon, which many have heard of thanks to the hype around Bitcoin, but only a few understand what it is. Because of this, the general public has some pretty strong misconceptions regarding what the new technology is truly capable of. This article outlines the four most popular myths about asset tokenization and tests them in terms of credibility.
Issuing a Token Is Too Difficult
Perhaps this is the most popular misconception about asset tokenization at the moment. According to it, to launch a token, the user needs to be well versed in blockchain and be able to code in Solidity or another programming language. A couple of years ago this was true, but nowadays there are platforms such as Harbor, Tokensoft, Binaryx, and Binance, with which everyone can issue their token in just a few minutes.
For example, here’s how you can create your NFT on Binance.
- Go to the Binance NFT page and click on “Create”.
- You will be redirected to the page, where you need to upload the file that you want to make your NFT. It can be an image, video or audio.
- After uploading the file, you need to specify the data required to issue your NFT: name, preview, type, description, price.
- Upon uploading the file and entering the data, you need to click on “Create”, and the token will be ready. Then it can be listed on an exchange, saved or transferred to another person.
As you can see, launching your token on Binance is as easy as buying products online or calling Uber.
Trading Fractional Shares of Real Assets Is Difficult
This myth is partially true. Trading fractional shares of real assets (real estate, cars or a factory) is burdened with some difficulties associated with the authorization and taxation of such transactions. But this is not a problem of investors and traders, but of asset tokenization platforms. They must solve the token emission registration and tax repayment problems, following RealBlocks (real estate), OneGram (gold), Vakt (oil).
In addition, there are also ordinary shares that provide ownership of the share of the issuing company, that is, a fractional share of real assets owned by the issuing company. It is very easy to trade such shares, for example, with the help of Robinhood. There you can also trade fractional shares, which represent a fraction of the real assets of the company.
Asset tokenization with the help of blockchain doesn’t make this kind of trading any more difficult. It simply drives the process to the blockchain, which makes transactions faster, safer, and more cost-effective. Nowadays, many tokenization platforms offer their tokenization services. Tokenization is even available on cryptocurrency exchanges. For instance, digital asset exchange Binaryx recently announced the launch of the tokenization planform in addition to its exchange capabilities. Hence, the exchange can provide a full cycle of tokenization, including token issuance and its listing, within one platform.
Tokenization Is a Purely Theoretical Concept
This is an old myth that was very popular a few years ago when the technology was making its first steps and there were no successful blockchain asset tokenization projects on the market. It’s easy to bust it. Just have a look at the projects such as TradeLens from Maersk and IBM (50% of the global dry cargo market). It’s a logistics platform that tokenizes money, goods, cargo, transport, docks, companies, and many other things related to dry cargo logistics.
Asset Tokenization Is Identical to ICO
Asset tokenization is the process of replacing physical, legal, intellectual or digital assets with tokens on the blockchain. And the initial coin offering, or ICO, is a mechanism for raising funds for the early financing of blockchain startups. As we can see, these concepts may overlap, but they are not identical. Figuratively speaking, tokenization is the process of moving to a certain city, whereas ICO is one of the roads leading to it.
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