Imagine the person having the possibility of acquiring a small part of their soccer team favorite or even to do financial investments in assets that, in principle, would not have conditions. Well, this scenario has been made possible in recent months thanks to an increasingly popular concept around the world: tokenization. This growth is precisely linked to the advantages that the model offers, such as greater security, transparency and agility to the different existing transactions, financial or otherwise.
Today, the sky is the limit for this market that “tokenizes” practically everything, from works of art to financial goods such as real estate, stocks on the stock exchange, gold and money. Any physical asset can have its digital version and be traded through block chains. But what is the limit for this novelty? After all, everything that grows too fast brings with it several dangers that need to be assimilated by users working in this ecosystem.
- Company launches device capable of mining BRL 8 in bitcoins per month
- Imports of cryptocurrencies moved R$ 25,1 billion until September in Brazil
- Movie theater chain already has 14% of purchases made with cryptocurrencies
- Teacher can become a millionaire with NFTs course
The data proves the evolution of this niche. According to estimates by the consulting firm MarketsandMarkets, the global tokenization market should have an average annual growth of 19,5% between 2020 and 2025, going from US$ 1,9 billion to US$ 4,8 billion in the period. Several factors explain such positive numbers, such as the growing demand for solutions and services of this type in the corporate environment, the greater adherence of digital payments and the acceptance of financial institutions for digital solutions. In short, companies and consumers are using tokens and making different assets to bet on this format.
But before proceeding with the text, it is necessary to clarify what token means. Basically, it is a digital representation of a real asset, that is, something that is traded in the physical world, such as a certain amount of gold, land, among others. Its digitization takes place through blockchain technology, the basis of cryptocurrencies and capable of transforming an asset into digital “small parts” to facilitate internet trading.
Tokens are governed by smart contracts that determine the operating rules – including the return on investment to those involved. In addition, they serve different purposes and uses, divided into four major categories: security tokens (transferable assets capable of generating income); utility tokens (which are of some use); equity tokens (similar to stocks and traded to raise funds); and NFT (unique digital assets that cannot be replaced).
Once you understand what token is, it's easy to see why tokenization is an ongoing process in many areas. It is easier to trade “parts” of a given good than the whole. Anyone who owns land and needs money to build a project, can sell hundreds or thousands of tokens to obtain the necessary funds for this purpose, guaranteeing profit sharing or even rent income. The practicality and transparency of the smart contract ensure greater liquidity in the operation.
Another positive point that explains the popularity of tokens is the greater democratization among investors. Traditional assets are usually restricted to small groups due to investment limits – as is the case with real estate funds. Tokens, on the other hand, are known for having much more affordable values for the vast majority of Brazilians, including those traded from R$50 onwards. It is ideal for those who want to build a diversified portfolio with high volatility assets.
The high variation in token prices, by the way, is one of the main dangers. Although not comparable to cryptocurrencies, they are assets that can go up or down in value overnight by around 10%. Furthermore, the idea of tokenizing everything also needs to be tackled! For a given asset to have its digital version, there is a rigorous analysis of documents and compliance – all to ensure greater security for investors in transactions. Making tokens, therefore, is not a simple task.
However, this does not mean that the token market is down in Brazil. On the contrary, the trend is, increasingly, to expand the participation of these resources in various sectors of the country. The advantages outweigh the potential risk, making it possible for a strong adhesion both among those who sell and those who sell. What we are seeing is just the beginning of a real revolution that combines technology and financial markets. The way we relate to financial assets will never be the same again.
* Alessandra Montini is director of LabData, FIA
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