Poised to bring a transformative difference in the finance world, blockchain isn’t just a fad- it’s here to stay. Characteristics like decentralization, immutability, and transparency has added new forms of benefits and applications into the ecosystem- one of which most prominent is asset tokenization on the blockchain.
In today’s #LearnWithEBRIC, we talk about how asset tokenization can be done on the blockchain.
- The process of verifying and appraising the asset is typically done by a third-party valuation firm or an independent appraiser. This is to ensure that the asset is accurately valued before it is tokenized and distributed to investors.
- Once the asset has been appraised and its value has been determined, a smart contract is created on the blockchain to specify the terms of ownership and the rules for trading the tokens.
- The smart contract is then stored on the blockchain and can be accessed and executed by anyone who holds the corresponding digital tokens.
Asset tokenization on the blockchain is completed when the conditions in the smart contract are fulfilled. Essentially, smart contracts are self-executing documents that back your digital tokens. These contracts include all the terms and conditions of the parties’ agreement in the form of lines of codes existing on the blockchain network.
It is only then that the digitized tokens offer accuracy, transparency, and overall efficiency to the investors and participants alike.
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