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Exploring the Value of Real World Assets in Today's Economy

November 30, 2023
Exploring the Value of Real World Assets in Today's Economy
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What are Real World Assets and Why Has Tokenization Made Them Important

Real world assets encompass a broad range of tangible and intangible items, from physical properties like real estate and artwork to intangible assets such as patents and copyrights. The emergence of asset tokenization, which involves converting rights to an asset into a digital token on a blockchain, has dramatically changed how these assets are handled, traded, and perceived. This digital transformation has unlocked new levels of liquidity, accessibility, and efficiency in asset management.

  • Diverse Asset Range: Real world assets include anything of value that exists physically or as a definable entity in the legal, financial, or cultural realms. These assets range from tangible items like buildings and land to intangible assets like intellectual property and brand value.
  • Tokenization as a Game-Changer: Tokenization divides the ownership of these assets into digital tokens, making them more accessible and easier to trade. This process has democratized investment in high-value assets, allowing broader participation and fractional ownership.
  • Increased Liquidity and Market Expansion: By converting real world assets into tokens, their marketability and liquidity are significantly enhanced, opening up investment opportunities to a wider audience. Tokenization breaks down traditional barriers to entry, such as high minimum investment thresholds, making it easier for individuals to invest in previously inaccessible assets.

How Real World Asset Tokenization Works and What Makes It Different

Tokenization of real world assets involves a unique blend of traditional asset management and cutting-edge blockchain technology, offering an innovative approach to asset ownership and investment.

  • Conversion into Digital Tokens: Real world assets are tokenized by issuing digital tokens that represent a share or a stake in the asset. These tokens are recorded on a blockchain, ensuring secure and transparent tracking of ownership and transactions. Kaleido makes it simple to tokenize an asset, start to finish.
  • Blockchain as the Enabling Technology: The use of blockchain technology in tokenization ensures immutability, transparency, and security in transactions. Blockchain provides a decentralized ledger that records all transactions related to each token, preventing fraud and unauthorized alterations.
  • Different from Traditional Asset Management: Unlike traditional methods of managing and trading assets, tokenization provides increased efficiency, fractional ownership, and global accessibility. This modern approach to asset management democratizes access and simplifies the complex processes of buying, selling, and transferring ownership.

Benefits of Real World Asset Tokenization

Tokenization brings a myriad of benefits to asset management, changing the landscape of investment and ownership.

  • Enhanced Liquidity: Tokenization increases the liquidity of traditionally illiquid assets, allowing them to be bought and sold more easily. This liquidity transformation opens up new investment opportunities and markets, especially for high-value assets like real estate.
  • Fractional Ownership: Tokenization enables fractional ownership, allowing multiple investors to hold a stake in an asset. This approach lowers the barrier to entry for investors, democratizing access to investment opportunities that were previously out of reach for many.
  • Improved Transparency and Efficiency: The use of blockchain in tokenization ensures that all transactions are transparent and efficient. The immutable record of ownership and transactions reduces the chances of disputes and fraud, streamlining asset management processes.
Infographic lists he benefits of asset tokenization

Industries Using Real World Assets

Various industries are leveraging the power of real world asset tokenization to transform their operations and open up new market opportunities.

  • Real Estate: In the real estate industry, tokenization is revolutionizing property ownership and investment, making it more accessible and flexible. Tokenizing property allows for fractional ownership and easier liquidity, making real estate investment more attainable for a broader audience.
  • Art and Collectibles: The art world is using tokenization to manage the ownership of artworks and collectibles, providing a new way for artists and collectors to monetize and invest in art. Tokenization not only simplifies the buying and selling of art but also helps in proving authenticity and provenance.
  • Finance and Investment: The financial sector is adopting tokenization for assets like bonds, stocks, and commodities, streamlining investment processes and enhancing market efficiency. This innovation is creating more dynamic and inclusive financial markets.
Infographic shows what assets can be turned into tokens

Blockchain Protocols Used to Tokenize Real World Assets

The tokenization of real world assets is facilitated by various blockchain protocols, each offering distinct features suitable for different types of assets.

  • Ethereum: Ethereum’s smart contract capabilities make it a popular choice for asset tokenization, especially with its ERC-20 and ERC-721 token standards. These standards provide the foundation for creating fungible and non-fungible tokens (NFTs), respectively.
  • Hyperledger Fabric: For enterprises seeking a more private and permissioned blockchain environment, Hyperledger Fabric offers a suitable platform for asset tokenization. Its modularity and flexibility are ideal for businesses that require customized tokenization solutions.
  • Corda: Created by R3, Corda is tailored for the financial industry, offering features like privacy, scalability, and interoperability. It is designed to facilitate direct and secure transactions between businesses.
  • Quorum: Originally developed by J.P. Morgan and now maintained by Consensus, Quorum is an open-source blockchain platform that combines the innovation of the public Ethereum community with enhancements to support enterprise needs. It emphasizes privacy, permissioning, and performance.
  • Hyperledger Besu: An Ethereum client designed for corporate use, Hyperledger Besu supports both permissioned and permissionless networks. It provides a platform for developing applications with a modular and flexible architecture.

Why Choose Kaleido for Real World Asset Tokenization?

Kaleido stands out as the optimal platform for tokenizing real world assets, offering comprehensive solutions that cater to the diverse needs of asset management and investment.

  • Versatile and Robust Tokenization Platform: Kaleido provides a versatile and robust platform that supports various blockchain protocols, essential for tokenizing a wide range of assets. Its adaptability makes it suitable for different industries and asset types, from real estate to intellectual property.
  • User-Friendly Interface and Tools: With a focus on usability, Kaleido offers an intuitive interface and tools that simplify the tokenization process, making it accessible to both technical and non-technical users. This ease of use is crucial for businesses and individuals looking to venture into asset tokenization.
  • Enterprise-Grade Security and Compliance: Recognizing the importance of security and regulatory compliance in asset management, Kaleido prioritizes these aspects in its platform. This focus ensures that tokenized assets are managed securely and in compliance with relevant regulations.
  • Integration with Existing Systems: Interoperability is key, and Kaleido makes it easy to integrate your existing systems with web3, and manage thousands of digital assets at institutional scale.
  • Unlimited Connectivity: On Kaleido, you can access and manage digital assets at scale across the chains of your choice, including public chains, private chains, consortium chains, sidechains, L1s, or L2s—all from one console.

The pace of real-world asset tokenization is increasing, highlighting the inadequacies of existing tools and methods. In addition to the features listed above, we've launched a new engine that is specifically designed for real-world asset tokenization in the enterprise sector.

This engine features an advanced open-source policy framework, establishing a new standard for scaling asset and data models to meet the demands of the today's business, among other innovations.

  • Asset Management Modeler User Interface: Inside the Kaleido Asset Platform you can now use a new UI and APIs to model assets, manage their workflows, streamline event processing, and enrich events. This gives enterprises everything needed to create innovative asset solutions.
  • Action & Policy Workflow Integration: Enterprise workflows are nearly always a mix of on and off chain workflows. Next-gen tooling needs to provide a seamless toolset for authoring and operation. New Policy and Task APIs allow you to automate on-chain and off-chain processes with configurable policy enforcement at every step. You can create tasks that orchestrate policy execution, trigger event streams from blockchain actions, dynamically enforce policies based on previous steps, and more.

Kaleido offers a powerful, flexible, and secure platform for businesses and individuals looking to harness the potential of real world asset tokenization.

Whether for enhancing liquidity, democratizing investment, or streamlining asset management, we can help you get the tools and support necessary to succeed in the evolving landscape of digital asset management.

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