Thomas GretherAs soon as an asset is tokenized or fragmented, a large number of individual value shares are created. These are called tokens. The tokens indicate the amount of the acquired share in a company or in a real object. One also speaks of the so-called “non-fungible token” (NFT). This is a unique cryptographic token and one-of-a-kind. Compared to fungible tokens such as bitcoin, it is “non-substitutable.” The token cannot be replicated.
Rental income is yours
For example, if you have purchased tokens worth 0.5 percent of a valuable bottle of wine, you own exactly that 0.5 percent of the wine. Or if you have invested in a property via tokens, you participate in the rental income. Rights and obligations are attached to the tokens, which are agreed in advance as part of a smart contract. The financial industry distinguishes between equity tokens and asset tokens in tokenization.
Tokens as a threat?
Crypto coins such as Bitcoin or Ethereum pose new challenges to the traditional economy in Switzerland as well. The situation is similar with tokenization: the public, politicians and authorities are suspicious of the new form of investment. It is important for lawmakers and companies not to dismiss blockchain and tokens as a fixed idea or perceive them as a threat, writes Cyrus de la Rubia, chief economist at Hamburg Commercial Bank in the Frankfurter Allgemeine Zeitung (FAZ). Rather, he says, it is important to stay on the ball in order to take advantage of the inherent opportunities.
How equity tokens work
An equity token, also called a security token, is a security-like token, comparable to shares. Whoever owns equity tokens has the same rights and obligations as the company in which they invest. It is the same with classic securities.
The advantages of equity tokens over original shares:
- Cost and time savings
- Massively less formalities, as banks and other financial institutions are not involved in the process
- Trading possible 24 hours a day via the blockchain
- Right to have a say
How asset tokens work
The asset token is linked to real property, for example, real estate or a work of art. Since the asset token represents an existing countervalue, it is comparable to securities. The blockchain comes into play as a trading platform. It effectively replaces the stock exchange.
As the owner of asset tokens, you may even get a share of the profits if the value of the asset increases. But be careful: On the other hand, you also have to accept a possible decrease in value.
The advantages of asset tokens are:
- Hurdles for you as an investor are lower to participate in the financial market.
- Tokens can be denominated very small – exclusive investments are possible.
- The market efficiency increases. Everything that has been tradable on exchanges is extended to investment assets.
Who offers tokens for sale?
Issuing tokens is a popular method, especially for startups, to obtain the capital needed to launch the company. Investors receive co-ownership and voting rights in the company upon purchase. This provides security for token buyers as they are directly involved in the development of the company. Tokens in the form of shares in real estate, works of art, wine or classic cars are offered by various banks and platforms in Switzerland, Germany and Austria, for example: Finexity - Marketplace for digital assets Sygnum Digital Asset Bank
FAQ – Frequently asked questions
Crypto tokens are digitized assets. They are mapped on a blockchain and can be traded.
You can buy as many shares as there are for an asset. Each token represents a fixed and predefined value.
Coins are a means of payment. They are traded like money. Tokens also have a value, but they represent an asset and cannot be used as a means of payment.
