Tokenized Equity: Crypto Exchanges’ Accessory

Tokenized equity shares are similar to traditional equity shares, other than that the shares appear in crypto tokens. Instead of crediting your Demat account, it deposits to your blockchain-hosted account.

When we imagine crypto as a mode of payment, we try to recollect all such things that one can purchase with crypto. For instance, cars, thanks to Tesla chief. Some food brands allow payment in specific varieties of cryptocurrency, such as Bitcoin and Ethereum. Several other products and services accept crypto for payment.

As crypto gets mainstream, other business ventures too would open up to crypto. Many Forex broking agencies have integrated a crypto exchange implying they are open to accepting crypto for sovereign currency. If foreign exchanges may add an ‘accessory’ in the form of a crypto exchange, maybe other security markets will follow suit.

Also Read: Why Should Commodity Broker Enterprises Enter the Crypto Stream?

You may wonder what if equity came in for crypto? Rest assured, somebody has already thought about it and named it Tokenized Equity.

What Is Equity?

Equity, usually referred to as shareholders’ equity, amounts to the sum of money that would return to a company’s shareholders if all of the company’s assets were liquidated and the entire company’s debt paid off in the case of liquidation. In the case of acquisition, the value of the company’s sale deducts any liabilities owed by the company not transferred with the sale.

The market in which shares of companies issue and trade, either through exchanges or OTC, is known as the Equity market. The equity market is also known as the stock market. It is one of the key areas of a market economy. It allows companies access to capital for expanding their business. Moreover, investors have a slice of ownership in a company with the potential to realize gains in their investment based on the company’s future performance.

Tokenized Equity

Tokenized equity. Here’s how it looks.

Tokenized equity implies creating and issuing digital tokens or “coins” that represent equity shares in a corporation or organization.

As businesses grow and blockchain becomes a part and parcel of transaction and utility-driven products, industries realize the convenience of adopting digitized crypto. Tokenized equity emerges as a practical alternative to raise capital wherein a business issues shares in digital assets such as crypto coins or tokens.

Drawing a parallel with equity share ownership as it exists today, the purchase of shares of a listed company during its IPO or from a stock exchange and then credited to your Demat account.

Tokenized equity shares function in the same way, other than that the shares appear in crypto tokens. Instead of crediting your Demat account, it deposits to your blockchain-hosted account.

The traditional methods of purchasing equity shares involve a lot of operational hurdles. Moreover, stringent regulations, non-cooperation of financial institutions, and challenges that business owners face in convincing private investors. A huge chunk of these issues resolve by adopting the crypto alternative.

Also Read: Life Of Forex Market In The Upcoming Years

Finally

Tokenizing the fragments of business ownership in the form of equity shares. Moreover, placing them on a blockchain offers a lot of flexibility in fundraising. The less expensive procedure allows for a more democratic way to pragmatically value the business. Thereafter, depending on the direct participation of the keen investors.