Imagine living in a world where you could easily sell one-thousandth of your apartment to, for example, a hundred people or, in turn, make a micro-investment in someone else’s property by purchasing one-thousandth of it. This world is already becoming a reality thanks to the blockchain technology on which Bitcoin and other cryptocurrencies are based, and lately - many other things as well.
Blockchain is a fully transparent and decentralised
system for data entering, which works as a one-of-a-kind public register that
is completely independent from any form of central
authority. Cryptocurrencies can be created on its basis, but what is more - communities
or companies, securities or real estate, even works of art and diamonds can be
Let us imagine that you want to invest in a real
estate property but you have a very small amount of money - for example, around
BGN 1,000. Or you want to invest in that asset BGN 1,000 once every few months.
Obviously, with such resources, you cannot buy any housing, land or even a
garage. This is how the
for real estate properties has been working for
centuries - what is sold are entire housings, and not for example one or two
square meters of them. On the other hand, if you have some kind of a property
and you need money, you could sell it. The problem is that it can be estimated
at BGN 150,000, and you may only need BGN 10,000 and not want to part with the
whole asset because of this. Again, there are not many opportunities on the traditional
market. Just because it will be hard for you to sell one corner of your living
room or kitchen, which is worth the amount you want.
Asset Tokenisation is about to change all this. This
concept has emerged in connection with the blockchain technology, which has
become popular in recent years with the rise of Bitcoin and other
cryptocurrencies. In essence, tokenisation digitises the ownership rights of a
certain asset, turning it into the so-called tokens. Most often, blockchain and
smart contract platforms based on it are used for that. The most popular of them
is Ethereum - a project whose creators practically came up with the idea of
“smart contracts” and to whom many predict success like the one of Google or
Let us go back to the aforementioned example with your
apartment worth BGN 150,000. If you “tokenise” this property, you can turn it
into, let us say, 150,000 digital tokens, each one of them worth BGN 1.
Once you have posted them on a platform like Ethereum (the so called ICO or Initial
Coin Offering), they can be acquired and sold freely, under
Just like anyone who wants to can very transparently
trade bitcoins from multiple Internet stock exchanges at the moment. If, for
example, someone purchases a token, they will own a 150,000-piece of your
property. If they buy 50,000 tokens, they will become the owner of one-third of
What is more, you will be able to define in advance the
rules on how the relationships among the future owners will develop. For
example, you can announce at the very beginning that you prefer to continue
living in this housing, and the token owners can trade with tokens, but they
cannot live with you or make parties in your living room. Here lies a potential
problem - token buyers
Become Legal Owners
of the respective asset. Blockchain works flawlessly
and will always guarantee that no one can remove or change the information
about the tokens you own from a certain asset. Technologically, the concept
works well. However, what is missing is a legal basis to guarantee token buyers
that they will not be deceived. No country in the world has yet introduced such
The second problem is that some types of tokens, which
give buyers rights similar to those of shareholders, are at the edge of
securities legislation. Financial regulators in a number of countries around
the world are already indicating that they will treat this type of token
“listings” as a circumvention of regulations, and in some countries they are
strictly forbidden. This, however, does not apply to the so called utility
tokens, which do not give buyers an ownership status and voting rights, but
mostly give them certain rights to use the
respective tokenised asset.
This industry is developing extremely dynamically and
the regulation of the sector will change in the future. In all cases, however,
the prospects for asset tokenisation are really promising. Many believe that it
has a potential to liberalise investment by making it accessible to the average
person who wants to make a micro investment in an asset or sell a small part of
their property. And this, in turn, can have a positive effect on the economy as
a whole, creating vast new opportunities for a small business.
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