Tokenization is a technologically innovative method of gaining exposure to investing products stored in a digital form on a decentralized ledger called the blockchain. It’s a new form of investment that is quickly gaining popularity due to the increased level of security and efficiency it can provide, and the tokenized assets market has already surpassed $20 Billion and keeps growing at a rapid pace. But what are tokenized assets specifically, and how can they benefit the precious metals market?
What is Tokenization?
The term “tokenized assets” refers to assets stored in the form of a digital token on a distributed, decentralized public ledger known as the blockchain. The main characteristic of tokenized assets from the practical point of view is the fact that they are secured with military-grade cryptographic algorithms. Since hacking these algorithms would take millions of years, assets stored on the blockchain are practically impossible to be stolen, forged or tampered with.
The underlying asset is not stored on the blockchain, but it doesn’t mean that the token itself is just a virtual item not backed by anything and with no real value. The tokenized asset can be considered a digital, cryptographic certificate of ownership of a real, physically existing property – for example, a specific amount of gold or silver or platinum stored in a well-protected, strategically located vault.
In other words, it would be a mistake to consider tokenized assets as purely virtual properties. While the technology used to prove the ownership of an asset is groundbreaking and innovative, it is used not to create value out of thin air, but to represent traditional assets in a form which allows acquiring, storing and trading them with unprecedented levels of security and efficiency.
The Benefits of Tokenized Assets
Tokenized assets are sometimes being compared to investment products such as ETFs, which can be misleading. While ETFs only reflect the price of an underlying asset, tokenized assets represent the undeniable legal ownership of a specific amount of a real asset.
Because of that, tokenization can be considered a form of owning a physical asset, which is physically stored in a remote, secure location, while the certificate of ownership is stored on a decentralized ledger. This innovative form of owning assets provides many benefits compared to more traditional forms of investment.
Greater Inclusiveness
Tokenized assets can be purchased by anyone, anywhere in the world, as they are not subjected to many limits which often discourage people from investing in traditional assets such as precious metals. For example, owning large amounts of physical silver requires a huge investment in security systems, but owning tokenized silver can provide a superb level of asset protection at a greatly reduced cost.
Increased Efficiency
The main problem with investing in physical investment products is the fact that purchasing and reselling them is very inconvenient. Ordering online or purchasing locally takes a long time for the order to complete, during which time the prices can change drastically. On the other hand, transferring the tokenized asset is immediate, so you can get in and out of investments whenever you want.
Reduced Costs
Tracking the ownership of physical gold with traditional means is very costly, which necessitates high annual fees, often starting at 1% or more of the total value of the investment. Blockchain technology relies on decentralization, which means that centralized intermediaries are replaced with automated algorithms. Because of that, trading tokenized assets is very cost-efficient, as the fees are very small compared to the premiums of traders selling investment products such as physical gold or silver or platinum.
Tokenization and the Precious Metals Market
Tokenization can be applied to all markets and all types of assets, but it is especially useful in the case of the precious metals market. As all gold-bugs know, precious metals are one of the best stores of value, but they also have some disadvantages, mainly related to how hard it is to transport and store metals such as gold, silver or platinum, especially in larger quantities.
Tokenization allows for transgressing the traditional limits of the precious metals market. It enables investors to gain exposure to a precious metal like gold in a unit that is agnostic of bar and brand. Since the token is a digital certificate of legal ownership, it can be processed or transferred instantly, but it can also be used to withdraw actual, physical gold at one of the numerous global locations, whenever the owner decides so.
Main Advantages of Tokenized Precious Metals
For the precious metals industry at large, tokenization is a way to allow the market to expand by disrupting it so that it becomes more inclusive. From the point of view of an investor, tokenization can be considered an optimal form of exposure to precious metals, since it provides many advantages over both physical metals and precious metals ETFs:
Security
For a long time, storing precious metals in a secure, remote vault was considered the safest way of investing in metals. Tokenization adds an extra layer of protection to this time-tested method of storing precious metals: while the metal itself is still being held in a vault, its certificate of ownership is secured with state-of-the-art cryptographic algorithms.
Flexibility
Tokenization enables the investors to take full control over their assets. Unlike physical gold or silver or platinum, tokenized assets can be bought or sold 24/7, and the trade order is always executed immediately.
Reliability
Cryptographic algorithms used to secure tokenized assets are impossible to be broken. Unlike paper certificates, they cannot be forged or tampered with, allowing you to put full confidence in your investment.
Why Choose Aurus?
Aurus is a UK-based fintech company pioneering the idea of empowering investors with exposure to tokenized versions of precious metals, created by a team of industry veterans with decades of experience in the market. The company offers tokenized gold, silver and platinum: AurusGOLD, AurusSILVER, AurusPLATINUM.
Tokenized metals provided by Aurus are not just virtual commodities, since all Aurus tokens are 100% backed by physical metals. Each token is redeemable for 1 gram of gold, silver or platinum which is accredited by the London Bullion Market Association (LBMA).
Aurus tokens were designed with sustainability in mind, meaning not susceptible to centralized manipulation. Tokens can only be minted by verified bullion suppliers adhering to industry best practices and vaulted by independent and complaint vaulting partners like Brinks and Marlca-Amit that are registered within the protocol. It is important to note the Aurus “the company” can never touch or influence the metals traded or vaulted.
Invest In Precious Metals Safely and Efficiently
Gold, silver and platinum are some of the oldest and most reliable financial instruments known to mankind, and they’ve been cherished by all cultures and civilizations since antiquity. Invest in Aurus tokenized precious metals now, and see how effortless it is to accumulate grams at a time in the most secure, convenient, and cost-effective way. Tokens can be purchased from Aurus partnered bullion dealers and exchanges.
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For more information, please visit Aurus.io
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