A Full Dive Into Tokenization #005

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Hello great minds,

I trust you are doing perfectly fine and are enjoying your activities in the community.

It is a wonderful opportunity to come before you all to continue our discussion on tokenization and we shall begin with immediate effect.

In our last discussion, we learnt about the application of tokenization and we shall continue our discussion.

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APPLICATION OF TOKENIZATION

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There are several applications of tokenization in the cryptospace and security token is one of it's application.

As we continue on this course, we shall see how tokenization can be applied to security tokens.

• SECURITY TOKENS:

In our last discussion, we learnt about tokenization of security tokens, and we explained what security tokens are.

Today, we shall examine how tokenization can be applied in security tokens.

SMART CONTRACTS

Security tokens have some connection with smart contracts, and smart contracts are self executing contracts that triggers itself when a specific agreement is met.

Smart contracts is capable of automating several processes some of which includes interest disbursement, dividend payment, compliance check, thus enhancing efficiency and reducing administrative overhead.

IMMUTABLE OWNERSHIP RECORDS

The blockchain technology helps in guaranteeing that all transactions related to security token are recorded in an Immutable and transparent manner.

This helps in creating a tamper-proof and reliable records of ownership, thus eliminating fraud, unauthorized changes to ownership records or dispute.

GLOBAL ACCESS

Security tokens have global access as they can be sold and bought by investors all over the world.

This global accessibility is very important for assets that were previously restricted to regional market or local markets.

It increases the potential for capital inflow and broadens the investor base.

REDUCED INTERMEDIARIES

The trades in the traditional financial market most often consist of intermediaries, including clearing houses, brokers and depositories.

This process however, can be streamlined by security tokens by allowing peer to peer transaction, thus eliminating the need for intermediaries and their transaction cost.

COST EFFICIENCY

The process of tokenization most oftentimes lead reduced costs for both issuers and investors.

Investors mostly benefits from lower trading fees and reduce costs the management and assessment of investment.

Issuer on the other hand enjoys from lower issuance cost, streamlined compliance processes and reduced administrative expenses.

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CONCLUSION

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We have considered today, the application of tokenization in security tokens.

As we proceed further, we shall learn more about tokenization.