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What is an Asset-Backed Token? A Complete Guide

Apr 10 , 2021 | 1687
What is an Asset-Backed Token? A Complete Guide

In this fast moving world, people prefer all sorts of things or technology to be in handy. This influenced in virtual currency world too, to make connection the real-world and virtual currency world as one and also beneficial. That results in the concept of Asset-backed tokenization.

Here we are going to a simple guide for the concept of Asset-backed token by the well known Asset-Backed Token Generator who also known as the best Ethereum Token Generator.

Table of the Content:

* What is an Asset-backed Token?
* Categories of asset-backed tokenization
* Advantages of asset-backed token
* Applications of Asset-Backed Tokenization in Real-world
* Create Your Own Asset-Backed Token

What is an Asset-backed Token?

Asset-Backed token is represent its name which is nothing but the combination of virtual currency with the famous real-world assets. The best explanation is, Ethereum token is backed with the fiat, gold, silver or any other asset.

Moreover, the well know in the market is, Real Estate Asset Tokenization.

Which is the amalgamation of real estate assets with the crypto token and this is a highly demanding domain now in the business world.

Smart Contract are automatically generated with the token and when it is pegged with any real-estate asset that ensures and enhances the asset safety and security to the next stage. That is why asset-backed tokens are often provided with the security token, which is commonly known as STO.

Categories of asset-backed tokenization

Here is the list of Main Asset-Backed Tokens and let's have a brief lookout about it separately. They are,

  • Debt and equity tokenization
  • Asset backed tokens for commodities
  • Hard asset-token which are non-fungible
  • Soft asset-token which are non-fungible

Debt and Equity Tokenization

Debut and Equity Tokenization are vastly used among start-ups for funding purposes. Initially they are stuck with the traditional funding and depend on banks, that makes some drawbacks in launching the IPO's. So this feature aided them and also provided the authority of the ownership in percentage with certificate. It is also one of the perfect examples for the use-case of asset-backed token.

Asset backed tokens for commodities

These asset-backed traded commodities can likely be converted into security token and it include numerous things regardless of the involvement of third party like wheat, oil, sugar and such things.

Trading of other commodities, like renewable hydro-electric, wind, and solar electric energy can also be the facilitated via blockchain based exchange. As a result, the governments, utilities companies, individuals could participate and transact together on the same platform.

When we talk about the gold trading is different. Each gold-backed token represent a verified and audited gold bar which represent a full one or fraction. This auditing process is done via 'Oracle' to check the gold purity, authenticity, weight and other things.

And this digital asset can vary other than begin gold, which is Bitcoin.

This bitcoin often referred as gold in the crypto world because if this gold bar in the virtual world can broke and sell in the form of fiat-backed currency to an individual then trading will become very much easier and it will also be similar percentage of trading gold in real-world and it suits for other real-world commodities too.

Hard asset-token which are non-fungible

As the name says, it represents physical items and the best example is real-estate asset tokenization. This real-estate tokenization is happened through REITs and funding this token is borderless and more profitable. Hence, these tokens are issued without any restriction it makes the investment democratic for various things like portfolio of rental properties, senior-care homes, or a hotel chain.

This same can happen in artwork which can also be distributed via blockchain. It can be held in a museum and distributed to shareholders. These hard-asset tokens are also can be referred to as non-fungible token.

Soft asset-token which are non-fungible

This soft asset-token is contrast to the hard asset-token which means that, the soft-asset token are intangible tokens and that are hard to evaluate as well as quantify. Best examples are intellectual properties, copyright licenses, trademarks, patents, and royalties have meager liquidity. Asset-backed tokens can likewise bring price discovery and liquidity to these assets.

Advantages of asset-backed token

Since the assets are backed with the crypto token which are build from the decentralized blockchain platform, it became obvious that the benefits will be high. And, here is the list of advantages of asset-backed tokenization,

  • Greater accessibility and liquidity of assets
  • Transparency
  • Immutability
  • Fractional ownership
  • Cost savings

And Normally it will take hours or days for an asset or fund transaction but this blockchain technology makes the things quite easier.

Applications of Asset-Backed Tokenization in Real-world

Here are some of the applications which depend on the asset-backed tokenization that are used in the real-world,

  • Tokenization in Finance
  • Tokenization in real-estate
  • Gold backed token
  • Silver backed token
  • Tokenization in artworks
  • Tokenization in sports and entertainment
  • Tokenization foe ecology
  • Personal Tokenization - can also be done.

Create Your Own Asset-Backed Token

So, create your own token and safe-guard your asset as well as earn profit by it. Creating your own asset-backed token is also easily now by utilizing the Ethereum Token Generator platform like TheTokenLauncher. TheTokenLauncher, is one of the leading Ethereum Token Builder which used peeps to create Ethereum token instantly because it has in-build codes as time effective as well as cut off the need of developers help nor the coding knowledge.

                                 Create Your Own Asset-Backed Token here!!