There’s the potential to go further than traditional asset classes as tokenized shares can bring together a combination of those - which could create new security structures. For now, we will explain how existing assets can be tokenized and we have grouped the possibilities into four mains classes:
Assets: An asset is anything of value that can be converted into cash. Individuals, companies, and governments own assets. They can be divided into two categories, personal assets and business assets. Personal assets are anything from cash, cash equivalents, savings accounts, to property or even investments. Business assets, as you would expect, are any assets that are present on the balance sheet. These assets can be owned fractionally through the process of tokenization.
Equity: Shares, i.e. equity, of a business can be tokenized. To use the analogy of every day share ownership, the shares of a listed company can be bought during its initial public offering (IPO), or on the stock exchange. You then have your demat account accredited. This process can be tokenized, but the assets are in the digital form of security tokens and are stored on a blockchain hosted wallet.
Funds: An investment fund is a supply of capital belonging to numerous investors used to collectively purchase securities. Each investor retains ownership and control of their own shares. The same principle can be tokenized, and the tokens can represent your share in the fund.
Services: The goods or services of a business can be offered as a way to raise investment for that said business. The token issued here is called a utility token and can only be used to purchase the goods or services offered by the issuer.