Why it is a good time for metal tokenization
The gold price by the end of 2022 will probably break its historical maximum. The same situation with a rapid cost growth is almost with all precious metals. Nowadays, one of the most promising ways to invest in gold, silver, platinum, and other metals is metal tokenization.
We can see a massive demand on tokenization platforms for metal commodities tokenization. With such platforms, token users will have direct ownership of the gold, silver, platinum and know where it came from, how it was produced, and how many investors seek it today.
This article will examine the latest trends in tokenization and how beneficial they can be for token owners. Also, we will briefly outline the future perspective on tokenization for the metal market and share our thoughts and forecasts on this investment trend.
What is tokenization?
Few digital trends affect the economy worldwide. The first one is moving to blockchain-based currencies. Another critical trend ― tokenization ― provides an excellent opportunity to influence the global economy and make it more stable.
What is tokenization? This is the process of transforming data into a random string of characters called a token. All tangible and intangible assets can be converted into digital tokens. In other words, we can convert almost all possible real assets into digital ones by issuing security tokens registered in a blockchain.
One of such assets we speak of today is precious metals, such as gold, silver, platinum, or cobalt.
What is metal tokenization, and why does it matter?
When we speak about tokenized metals, we mean the creation of digital assets that exist in the form of a token. In this case, each token is backed by a physical metal bar related to this metal’s market cost.
The demand for metal tokens was conditioned by inflationary pressure on the economy. However, metal commodities can provide an alternative for investors looking to diversify cash to other assets.
There is no doubt that custom metal tokens have a massive potential for investment security: the metal market is not fully protected from scum and fraud, but tokenized metals have a high level of security, primarily because of asset decentralization.
Investors are looking for opportunities in products and commodities and verify and track this product’s validity. As experts argued, metal tokens allow you not only to point the right for entities but open a new way to trade those metal commodities.
Benefits of metal tokenization
Let’s start with some theoretical points to remind you about the custom metal tokens. Tokens are created on blockchain principles. It means that they can be traded in a decentralized manner, and no institution can affect the process of buying and selling them. The most significant benefits of tokenization are inclusiveness, investment efficiency, security, and reduced costs.
What benefits can the trade market bring to metal commodities tokenization?
- Security. The most significant benefit you can get with metal tokens is security and safety, considerable protection from scams. All your tokenized metal will be protected in a secure place where you can trade your tokens. Market decentralization provides a new level of transparency. Just be sure that you will not suffer from fraud, which is too familiar in the precious metal market. For instance, JPMorgan will pay almost $920 million for manipulating the cost of gold. With tokenization, such issues are impossible. Also, you can consistently offer legal services consultation from Stobox specialists
- Increased liquidity. As you do not need an actual piece of physical gold, silver, or platinum to trade it in the market, you can quickly buy or sell your token from any location.
- You know the metal’s origin. You may wonder why the origin of precious metals matters for the market. First of all, there are a few methods for the legal mining of metals. And it makes the market pay extra attention to its supply chain. No one wants to own illegally mined metals. Decentralized tokens make all transactions transparent with certification technologies.
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The future of metal tokenization
There are a lot of use cases when tokenization opens a new perspective for investors. For instance, the demand for cobalt is growing every year, and many investors already want to buy cobalt digital assets. From a comparative perspective, we will be able to invest in gold and silver, which is quite affordable, and other precious metals.
We find that tokenization assets became as tradable as crypto, making investors more interested in asset creation. As experts predict, the tokenization market size will grow to $ 5.6 billion by 2026. Another vast demand we can see nowadays is a demand for transparent transactions, especially in the case of metal tokens.
Jeanine Hightower-Sellitto also pointed out the value that metal commodities tokenization can bring to the market. There is a huge demand for metal types of assets for the retail public, especially if you move outside of gold. But such metals as cobalt or platinum open a new era of metal commodities.
It is time to look more precisely at the tokenization platform and consider metal tokenization investment.
Metal commodities tokenization is a solution that provides better liquidity for metal assets and simplifies the legal processes. Like any tokenized asset, custom metal tokens are easier to trade, buy, or sell. They also provide a transparent asset background, which is an essential element of conducting a successful business.
If you want to get more information on asset tokenization, you can always talk to Stobox specialists by ordering a complimentary 30-minute consultation.