What is Tokenisation?
Tokenisation allows assets like real estate, art, securities and loans to be divided into smaller, tradable tokens, making them more accessible to a broader range of investors. By converting physical assets into digital tokens, tokenisation increases market liquidity, enabling easier and faster trading. Supporters of tokenisation foresee it can reduce transaction costs by eliminating intermediaries and automating processes through smart contracts.
Blockchain technology, which underpins tokenisation, provides a transparent and immutable ledger of transactions, reducing fraud and enhancing trust. It also enables global access to assets, allowing investors from anywhere in the world to participate in markets previously out of reach.
5 Reasons Why Valuation Add Value in Tokenisation
- 1
Valuation determines the fair market value of the asset to be tokenized, providing a basis for the initial price of the tokens. This is crucial for ensuring that the tokens accurately represent the underlying asset’s worth.
- 2
A reliable valuation process promotes fairness and transparency in token issuance. Investors need assurance that the tokens they purchase reflect the true value of the underlying asset.
- 3
Accurate and credible valuations help build investor confidence. Knowing that the token’s value is backed by a thorough and professional valuation process makes investors more likely to participate.
- 4
Valuation is sometimes necessary for meeting regulatory requirements. Authorities may require proof of fair value to protect investors and maintain market integrity. Proper valuation practices help ensure compliance with these regulations.
- 5
Organizations that tokenize their assets may need to report their financial status accurately. Valuation provides the necessary data to include tokenized assets in financial statements, ensuring comprehensive and accurate reporting.
Overall, valuation is a cornerstone of the tokenisation process, providing a good reference in price setting, thereby fostering a healthy market ecosystem.
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