Alternative Investments/Digital: Blockchain-Based Tokenization Could Revolutionize Alternatives (Report)

https://dailyalts.com/wp-content/uploads/2021/02/coin-1379517_640.jpg

In particular, tokenization could democratize access to private and alternative assets.

Alternative assets offer better options for investors these days when the traditional [60:40] portfolio looks risky and generates insufficient returns. Though suffering from comparatively poorer liquidity alternatives could provide much-needed diversification and better risk-adjusted returns for investors. However, these investments have traditionally been accessible to institutions and high net worth individuals. Tokenization may change the status quo, giving retail investors an opportunity. (Institutional Investor)

Tokenization

Tokenization uses blockchain technology to create fractional digital ownership of assets such as real estate. In other words, it is a digital representation of non-digital assets. These fractional shares are called tokens.

A report issued by BNP Paribas Asset Management, Chartered Alternative Investment Analyst (CAIA) Association, and Liquefy, a Hong Kong-based tokenization platform, says that tokenization could be a shot in the arm for bringing illiquid but valuable private assets into retail portfolios.

Tokenization could also open up new lines of business for asset managers.

Tokens digitally distribute ownership of what was previously an indivisible, physical asset. Transacting tokens can be faster, cheaper, operationally easier than legacy processes, with the added advantage of tradability in secondary markets.

Alternative investments have proved themselves

Though illiquid, alternative investments have generated higher returns compared to assets available in the public markets.

By broad-basing and simplifying their ownership, tokenization could bring new assets into the ‘alternatives’ fold. These include art, sports teams, wine, and other such exclusive investments.

Through tokens, these assets could become freely tradeable in secondary markets. Investors, of all types, could therefore sell their fractional ownership when needed.

Through the use of smart contracts, various terms and conditions of ownership, including payouts, could be embedded in the tokens themselves.

Another huge advantage would be new streams of financing that could help fund the creation of projects such as infrastructure and healthcare.

Adrian Lai, Chief Executive Officer of Liquefy, commented: “The synergies possible resulting from the adoption of disintermediating technologies such as blockchain are no longer a question of ‘if’ but ‘when’. While the full scope of applications of blockchain technology is still being explored, it is undeniable that blockchain technology has disruptive implications for the financial industry. Liquefy is particularly interested in the democratization and efficiencies that can be achieved, especially in relatively exclusive asset classes within alternative investments.”

Related Story:   Blockchain And AI Combine To Optimize Car Parking In Munich                                               

Free Industry News

Subscribe to our free newsletter for updates and news about alternatives investments.

  • This field is for validation purposes and should be left unchanged.


Shape

Latest Alternative Investment News

https://dailyalts.com/wp-content/uploads/2021/05/person-731319_640.jpg
Digital Assets: Colonial Pipeline Caved; Paid $5M Ransom To Hackers
May 14, 2021     Digital Assets, News

Though initial reports said that Colonial Pipeline would not pay a ransom to the hackers that brought the nation’s largest fuel pipeline to a halt, Bloomberg reported Thursday that the…

https://dailyalts.com/wp-content/uploads/2021/05/hand-898232_640.jpg
Artificial Intelligence: A Molecule For Alzheimer’s Created By Exscientia’s AI Enters Clinical Trials

Oxford, UK-based Exscientia uses AI to design and create drug candidate molecules satisfying complex therapeutic requirements with revolutionary efficiency. Joint research by Exscientia with Sumitomo Dainippon Pharma Co., Ltd. (TYO:…

https://dailyalts.com/wp-content/uploads/2021/05/clothes-5371410_640.jpg
Venture Capital: Vinted, The Marketplace For Previously Owned Clothing, Raises $303M
May 13, 2021     News, Venture Capital

Vinted, a European startup that runs a marketplace for used clothing and home goods, announced its raise of $303 million at a valuation of $4.5 billion, post-money. That valuation is…

https://dailyalts.com/wp-content/uploads/2021/05/68479250_1154496388083970_3396968202243145728_n.jpg
FinTech: German Regulator BaFin Hauls Up N26 On Money Laundering Lapses
May 13, 2021     FinTech, News

On Wednesday, Germany’s Federal Financial Supervisory Authority (BaFin) ordered challenger bank N26 to implement appropriate internal controls and safeguards and comply with general due diligence requirements to prevent money laundering…