Your asset as a code

Tokenisation of assets involves the process of digitally representing real, physical assets on distributed ledgers, or issuing traditional asset classes in tokenised form. This process can work for tangible assets like gold, real estate, debt, bonds and art, or certain forms of intangible assets such as ownership rights or content licensing. What is even more exciting is that tokenisation allows for transforming ownerships such that traditionally indivisible assets can be fractionalised into token forms.

Tokenisation’s importance stretches far beyond investment access; it could also facilitate new investing models. Currently, most investments leverage shareholder capitalism, striving to optimise profits and share price.

For example, when you buy a company’s stock, you provide money in exchange for a share, but how the company is run and governed is largely outside of your direct control. Since tokenisation leverages smart contracts, it could manage both the financial investment as well as facilitate the voting and/or ownership rights associated with the investment.

With tokenisation, the transactions of digitally native assets are stored and listed on a digital ledger on a blockchain network, giving one golden standard of truth across the globe. Further, the process of leveraging smart contracts permanently records transactions and makes them immutable and instantly executed. This provides speed in transactions and reduces administrative work as there are fewer intermediaries, lowering costs.

From ‘The Rise of Tokenisation’, BNY Mellon.