Blockchain is hailed as one of the greatest technological innovations of our time. However, a lot of people are curious about how exactly it facilitates digitization of assets.
In case you are wondering how the digitization of assets takes place over blockchain, we can help you figure out the procedure.
To understand how your physical assets can be digitized, you must familizarize yourself with the process of tokenization.
So read ahead to find out how exactly blockchain is helping the process of digitization.
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What is a Blockchain?
“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”
– Don & Alex Tapscott, authors Blockchain Revolution (2016).
To put it simply, it is a time-stamped series of immutable record of data that is managed by cluster of computers that is decentralized and not owned by any single authority.
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What is Tokenization?
If you haven’t heard of tokenization, you should definitely start reading up on it. It is the basic premise of the change that is happening in our society, vis a vis the tokenization of physical assets.
Tokenization is the process of converting some form of asset into a token that can be moved, recorded and stored on a blockchain system.
This way, our physical assets like real estate, property, or any other physical asset can be represented via tokens which can be issued on the blockchain.
These tokens can then be used for carrying out various transactions vis a vis the use of digital currencies or world currencies.
Blockchain’s ability to tokenize the assets is quite flexible and varied, but it is possible to group these assets into three broad categories – Intangible Assets, Fungible Assets, and Non-fungible Assets.
- Intangible assets represent notions, instead of physical goods, such as Patents, Copyrights, Goodwill and Brand recognition. These are the prime examples of intangible assets that one might be familiar with.
- An asset is fungible as long as it can be exchanged for another identical good of equal value. The most familiar fungible goods can be commodities. Fungible assets are, very often, backed by a physical resource, such as gold or wheat in a warehouse, and water or oil in a pipeline.
- Non-fungible goods, by contrast, cannot be interchanged. For example, the real Mona Lisa painting cannot be exchanged for the millions of digital copies present out there.
This way, blockchain is helping bring about an era of digitization in the world.
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