How Tokenization Works on Blockchain?

For those deeply entrenched in technology, the potential of blockchain technology to transform asset management is immense.

Tokenization stands as a pivotal driver in this transformation, involving the conversion of real-world assets into digital tokens on a blockchain network.

How does this transformation occur?

Let's delve deeper into the workings of tokenization on blockchains.

At its core, tokenization represents assets as digital units of ownership. Consider, for example, an invaluable painting. Traditionally, ownership meant possessing the entire physical work of art. However, through tokenization, ownership can be divided into tradeable tokens, with each token representing a portion of the painting, enabling fractional ownership. This opens up investment opportunities to a broader range of investors, thereby increasing asset liquidity.

But how does this process manifest in the technical realm of blockchains? Let's break it down:

1. Asset Definition: The initial step involves precisely defining the asset to be tokenized. This entails not only determining the type of asset (real estate, intellectual property, etc.) but also specifying its unique attributes such as legal ownership structure, compliance considerations, and location details for assets like buildings (e.g., location, square footage).

2. Smart Contract Formation: A smart contract, essentially self-executing code, is pre-written on a blockchain to govern the tokenized asset. This agreement outlines the management of ownership rights, transferability, and profit sharing associated with the digital asset token.

   This stage requires expertise from developers who design and implement the smart contract, ensuring its functionality, security, and compliance with regulations.

3. Asset Creation: Leveraging the asset's feature data and the smart contract, the creation of digital tokens occurs. This process, known as minting, distinguishes ownership immutably on the blockchain, ensuring transparency and visibility to all participants.

4. Exchange and Management: The tokens can be exchanged on platforms or marketplaces, facilitating peer-to-peer trading. The use of smart contracts enhances security by enabling secure and automated transactions without intermediaries.

   Additionally, developers play a crucial role in designing interfaces for managing and trading tokenized assets, fostering innovation in the space.

Tokenization revolutionizes asset ownership by enabling fractional ownership and streamlining transactions, all while upholding principles of transparency, immutability, and decentralization.

Libertum’s Platform

In the realm of deep-tech, Libertum is at the forefront of transforming asset management through tokenization.

Our approach involves tokenizing rental yield rather than the real estate asset itself. This strategy allows property owners to maintain ownership while investors receive Rental Income Tokens (RIT) representing a share of the rental yield.

Owners benefit from interest-free capital raised through tokenization, while investors gain confidence in their investment with a constant source of passive income.

As the tokenization of assets advances, it promises a decentralized and efficient asset class, reshaping investment portfolios. Libertum embraces this deep-tech revolution, unlocking the true potential of tokenized real estate investments.