Tokenization is the process of “breaking up” a tangible, real-world asset into digital shares.  These shares are known as security tokens because they’re keyed to the secure stored value inherent in the physical, real-world asset.  An example would be the tokenization of all or part of a physical property or building – this is the physical asset, which is divided up into a number of tokens held by investors.

Security tokens are an improvement over the earlier utility token model in which tokens were not grounded by a real-world asset.  Essentially, investors were buying into a particular application, and if the application succeeded, the value of the token would increase accordingly.  However, this also meant that their value could fluctuate wildly based on supply and demand.

In the security token model, while the value of tokens may increase in secondary trading, investors generally invest based on expected income at a certain guaranteed rate of return, whether in the form of dividends, profit-sharing, interest, or in some other way.

While utility tokens are still available, security tokens seem to offer far greater stability and credibility for the long-term and for serious investors, in part because they are regulated offerings which must pass all standard securities regulations, such as laws governing KYC (know your customer) and AML (anti money laundering).

However, since the value of security tokens ultimately comes down to the tangible, real-world asset, it quickly becomes clear that accurate property valuation before tokenization is essential to the stability, liquidity, and long-term payoff for both asset owner and investor.

What factors go into property valuation prior to tokenization?

• Location
• Local market & demand
• Macro & micro trends
• Development & infrastructure
• Risk
• Secondary market conditions
• … and much more

Right now, there are gaps that need closing in the market valuation sector.  Through advanced algorithms plus human intelligence and wisdom acquired through years of experience, we can help determine the “big picture” of an asset’s value – and we’re working to create better and better tech to help us harness AI, machine learning, and other advanced algorithms to help us do this right.

Investment shouldn’t be a stab in the dark, and fortunately, valuation strategies are improving rapidly to create an overall increase in professionalism and reliability.  If you are an asset owner or investor, we can help ensure fair and accurate valuation, letting you participate confidently in this exciting new growth area at the intersection of finance and technology.