SINGAPORE - The tokenisation of assets from wine to bonds to real estate has shown potential, but more needs to be done to fuel its growth and widen the base of assets it can be applied to, say industry players.
The first step is to dispel a common misconception that an asset is made valuable just by the act of tokenising it, said Mr Stephen Richardson, the Asia-Pacific head and managing director of financial markets at Fireblocks.
The company is a digital asset custody, transfer and settlement technology provider. The focus has to be on what one is trying to improve when using the technology, he added. But until you can prove that tokenising an asset at least provides the same, if not higher, level of service and efficiency than what you already do, why would anyone invest millions of dollars in it?
When an asset is tokenised, the overall process of issuing and trading in it is made more efficient and less prone to human error. The asset becomes digitised and is put on the blockchain, a type of distributed ledger. Physical paperwork is replaced with a smart contract. The killer application of the technology is that it allows for fractionalisation, where the value of an asset can be split into smaller pieces and sold at a lower price to a wider pool of investors.
This can enable assets such as fine art pieces to achieve liquidity. To complement the efficiency that tokenised assets provide, Mr Richardson makes a case for money to be tokenised as well.
