What are tokenized securities?

We can talk about tokenized securities when the ownership of security is materialized with the help of issuing a token registered in the distributed ledger technology (DLT) blockchain infrastructure. Securitised tokens include bonds, stocks or mutual funds, among others. Tokenized securities can also refer to other types of assets - real estate or artwork.

To better understand the concept of tokenized securities, it should be added that tokenization is a form of business digitization that is based on blockchain technology. Instead of securities, tokens or cryptocurrencies are issued and assigned to owners. With decentralized blockchain technology and the ability to make smart contracts, it is possible to tokenize assets of any kind - cash, investments, goods or materials. This is an opportunity, especially for smaller companies or start-ups that can't afford to start to operate on an exchange.

Popularity of tokenized securities

Tokenized securities are gaining popularity because they work more effectively and efficiently than traditional securities. They reduce transaction processing costs, decrease the need for intermediaries (which can be seen especially in the real estate market), and significantly reduce the time required to settle a transaction. Notably, the token representing property rights can be traded and easily liquidated, with all records of transactions and ownership stored in the blockchain system.