The info portal for tokenization & digital change

The token and its importance in the financial business

Tokens play an important role in tokenization: with them, you as an investor can participate in asset goods. The goods are piecemeal, each token is assigned a value. We clarify the advantages and disadvantages of token business.

As 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.

A token should be understood as a piece of a whole. Related to blockchain technology, a token securitizes ownership of certain assets, goods, or rights.
Yes, tokens are real, albeit only in the digital world. In this context, tokens have a fixed and clearly defined value. Banks active in the token business acquire assets and define the token issue via their value. For example, as an investor, you invest 500 francs (500 tokens) in a painting that has a value of 2 million francs.
Yes. Since tokenization is a new form of investment, there are risks such as legal uncertainty. It is unclear how the authorities will legally regulate token investment in things and goods. There are no laws yet, and exemplary legal cases are also lacking. In addition, the education and information of the population is still insufficient today.

Tokens as a threat?

Token Grafic different pictures

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

What are crypto tokens?

Crypto tokens are digitized assets. They are mapped on a blockchain and can be traded.

How many tokens can I buy?

You can buy as many shares as there are for an asset. Each token represents a fixed and predefined value.

What is the difference between tokens and coins?

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.

Thomas Grether

Journalist | Editor | Entrepreneur & Environmental Scientist.
Main focus: Tokenization | Digital Transformation Processes in Companies | Internet and Web Publishing | Environment

Thomas Grether

Journalist | Redakteur | Unternehmer & Umweltwissenschaftler
Schwerpunkte: Tokenisierung | Digitale Transformationsprozesse in Firmen | Internet und Webpublishing | Umwelt