The trend of converting assets into digital tokens expands throughout the region
We could define the word “tokenization” as the process of converting physical or intangible assets into digital tokens on a blockchain. Tokens represent assets and can have their own value or represent ownership, rights or access to resources.
Tokenization has numerous benefits, such as ease of transfer, liquidity, transparency, and the ability to split expensive assets.
Additionally, blockchain technology can ensure the integrity and immutability of records, giving participants confidence.
Guillermo Escudero, regional and strategic alliances manager of Cryptomarket -cryptocurrency exchange platform-, explains: “Specifically speaking of blockchains and tokens created on top of them, tokenization is the issuance of a token within a system that allows the interoperability of said token.
Let’s remember that one can issue a token without the need to have any backup, something like a “token”, and send it between the parties, or even have a use such as tokens in a video game.”
“But there are interesting cases in the use of blockchains, since it is possible to tokenize both movable and immovable, physical or legal, fungible or non-fungible things, public domains and private property, present and future things, and divisible and indivisible things. ”, he adds.
Escudero clarifies that there are already tokenization projects, not only for real estate -the most popular cases lately-, but also for agriculture -a success story from Argentina with Agrotoken-, as well as coins issued by Latin American governments or even tokens. of gold that can be purchased on platforms such as CryptoMarket.
Potential in the real estate market
Álvaro Castro, co-founder & Chief Portfolio Officer of Rext -a company specializing in real estate tokenization and real economy assets- believes that tokenization has the potential to change the real estate market and says: “It is estimated that by 2030 10% of the economy global will be tokenized, with Real Estate being the vertical with the highest penetration”.
In this sense, explaining that, by tokenizing a property, it can be divided into multiple parts, allows investors to buy a fraction of the property instead of having to buy it in its entirety.
This lowers the barriers to entry into the real estate market and allows more people to invest in real estate. In addition, tokenization can bring high liquidity to a low liquidity market, since tokens can be bought and sold more easily than physical property.
On the other hand, “for an Argentine investor or from any Latin American country, being able to invest in a property in a very solid market such as the United States represents a great attraction for savings and capitalization,” he considers. But also, “tokenization in the first place allows investors to access assets that might otherwise be out of their reach. In our case, an investor can own (part of) a property in the United States from USD 1,000, in addition to avoiding bureaucracy, the need to register an LLC, hire lawyers and accountants in the United States”.
Virtual representations, finance and innovation
Leo Elduayen, CEO and co-founder of Koibanx -a leading company in financial tokenization using blockchain technology-, also agrees on the real estate market, but not only abroad, but also highlights the new financing format for real estate projects that arises through the tokenization of real estate in Argentina:
“It is based on the real estate crowdfunding modality, with the particularity that each participation is represented by tokens. This provides benefits such as transparency and traceability through blockchain technology. Also, the immutability of the tokens allows investors to verify the status of their stake.”
“However, from Koibanx, where we see the most transformation that tokenization on the blockchain can bring, is in the financial sector. We currently have five types of tokenized asset classes: fiat money (Argentine pesos, Colombian pesos, dollars, etc.); commodities (land, energy, etc); financial instruments; electronic credit invoices and bank guarantees”, says Elduayen.
And he adds: “In this sense, by connecting the infrastructure of the traditional financial system and/or its processes to our platform, traditional banking manages to lower transaction costs and terms, while automating their reconciliation. In this way, they can offer their solutions to new market segments and create new financial solutions to meet the growing demand of their end users”.
From Bitwage -the pioneer platform for payment of fees in cryptocurrencies and digital dollars most chosen by workers, freelancers and service exporters-, Ramiro Raposo, VP of Growth and country manager for Argentina, agrees that, “without a doubt this will change the real estate market but also so many other industries. When technology is applied to a market, it ends up benefiting even if at first there are some doubts or even rejection”.
And he adds: “The best thing is that thanks to tokenization, investment processes are much faster and cheaper, making the market more agile and cheaper, attracting more investors and enriching the system. The word “invest” is no longer just for millionaires and opens the door for small savers”.
Martín González is CEO & co-founder of BAG -blockchain technology company that offers tools specially designed for art and culture-, and from place, he also expresses that “practically anything tangible or intangible can be tokenized in the context of cryptocurrencies and blockchain technology”.
When asked about the advantages of tokenizing an asset, he answers: “There are many, including increasing liquidity, reducing friction in circulation, tokenizing in the desired unit of measure so that the retailer has access, smart contracts that They give absolute security of compliance, cost reduction, etc.”