Tokenization, NFT & Fintech: what opportunities are there?
To understand how tokens,as well as NFTs which have become so popular today, can be useful to those operating in the fintech world, we spoke with Francesco Piras, Co-Founder of Brightnode.
What tokenization is and what it is used for?
Tokenization is the representation,in the form of a token, of a right, or physical or digital asset. The token is a sort of container that can hold, for example, a property right on a luxury good, a share in a company, or the fractional ownership of a property, etc. When only one token is used it is non-fungible and is an NFT. When several equivalent tokens are used, they are fungible and have the same exchange value.
The token is a computer code created and managed through blockchain technology. Tokenisation serves to manage assets, usually illiquid, more efficiently and with potentially greater liquidity. Furthermore, by using blockchain as the technical basis for management and transfer, the fragmentation and slowness of the traditional system is overcome thus sharing a common, secure, non-falsifiable infrastructure that is easily verifiable by all.
Why would it help attract investors?
Tokens on blockchain are a technical solution to the problem of having a common and shared infrastructure worldwide, in which there is less friction and the liquidity of the asset is potentially easier to obtain. These are important aspects for an investor, as is the possibility that the token will quickly appreciate in value and can be easily resold in the secondary market.
Managing your investment portfolio using a crypto wallet is undoubtedly simpler and more convenient than through paper certificates and fragmented procedures. The programmability of the tokens and the transparency of smart contracts allow you to receive returns and profits in an automatic and non-corruptible manner.
NFTs: what are they? We often hear about them for artwork and such, but what business opportunities can they represent for a fintech for example?
NFTs are non-fungible tokens, i.e. those that uniquely represent a specific physical or digital asset, or a right.
NFTs can be used in many areas. They have become popular in digital art and creativity, but have use cases in other contexts as well, due to their uniqueness and anti-counterfeiting properties. They can incorporate automated royalties, which can be useful for content creators.
In fintech they can be useful because they can, for example, represent a physical asset as collateral in decentralised finance transactions (DeFi). In general they can create a mechanism whereby financial products and services are represented by a unique token.
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