The financial world, in particular,r will have to deal with this technological development. It was once the introduction of the stock corporation in the 17th century that was so revolutionary and ultimately changed the entire financial world. With the potential of blockchain technology, many experts see a new milestone in the development of the financial world and financial markets. The World Economic Forum has published numerous analyses and studies and assumes that by 2029 a value of approximately 10 trillion US dollars will be tokenized with the help of the blockchain.

In few countries, the federal government has published its blockchain strategy and announced the token economy. Few countries in the year 2019 decided with a change in the law that cryptosystems will become an official financial instrument with appropriate regulation. With this political movement, the fourth EU amendment directive on money laundering was transposed.

Blockchain

Best Cardano dex blockchain is a technology with which a database can be created and operated over a network of different participants. If the participants are at different locations, we speak of a decentralized system. The data is stored continuously and is linked to the previous data record. A subsequent change is almost excluded and manipulation is not possible.

Token

A token is a piece of a whole. In terms of blockchain technology, a token certifies ownership of certain values, goods or rights.

Tokenization

Tokenization is the division of an entire unit into individual components. Concerning blockchain technology, a defined value is mapped digitally into individual values known as tokens.

What Is Tokenization?

The term tokenization describes fragmentation or division. A single part or piece is called a token. About a financial instrument, tokenisation is a digital securitisation process of ownership of certain assets, goods, physical objects or rights. Through securitisation, ownerships can be represented by a digital token.

For example, if the value of a property is tokenised, this can mean that several people can acquire digital shares of a property. Each of these people will share the value of the property by owning the token and even understanding these tokens is very important.

The advantages in terms of efficiency of cost and transferability are enormous. There is no need to go to a notary and no land transfer tax is triggered when the token is transferred. Token are in no way inferior in functionality to digital securities. The advantages move the industry and will have an impact on existing stock exchanges and financial markets. Everything that is tradable as digital security today could be tokenized and issued tomorrow using blockchain technology to save costs and time whilst increasing efficiency. It is also possible that existing financial instruments could be expanded to include new assets in the future.