Enable easy, digital Peer-2-Peer transferability of your shares (End-2-End)
One of the biggest benefits of tokenization is the idea of peer-to-peer transfer. With traditional shares, the owner must request that a central party that maintains the register transfer their shares to a new owner. This means you are forced to trust their accounting, they can charge you for the transfer, they can refuse the transfer and you must do it on their terms and opening hours.
Empower 24/7 liquidity for your shareholders for unconstrained trading
When shares are traded, we get an idea of how the market values the shares. When trading is restricted to certain days and hours or other frictions around trading exist, it dampens the signal from the market, causing price distortions. Tokens can be traded around the clock, all days of the year. Tokens might not be traded constantly, but the fact that they can means there is nothing standing in the way of the market pricing mechanism and tokenholders always have the ability to sell or buy, giving them liquidity when they might need it.
Automate and secure a transparent share register
Shares need some kind of ledger or register to keep track of who owns the shares. Normally, a central party stores and maintains this ledger. With tokenized shares, the ledger is stored by all computers participating in the blockchain network. The ledger is synchronized with each change, and each change is governed by a small, unchangeable program called a smart contract. Both the ledger and program logic are visible for independent verification of transfers and state, as well as a full view into how the program can change the ledger. This transparency provides trust in the automation, meaning all the tasks, communications and reconciliation are now automated and executed by computers, not central parties. The transfers and the ledger itself are secured by strong cryptography and the entire network’s computing power; as the network grows, so does the security.
Develop and run a rule engine that governs corporate actions, voting, compliance
Companies are legal entities and must comply with certain laws and regulations. Since tokenholders are owners of a company, their actions must also comply. By default, tokens can be transferred and held in an unconstrained way. But because different companies may be subject to different laws, rules can be embedded directly into the ledger and transfer actions. This means that tokens can be created which programmatically comply with laws. These rules might govern who may receive tokens, when can transfers take place or how many shares may be transferred, for example. This point is, local laws and internal company statutes can be translated into coded rules, and compliance becomes inherent.
Enable programmability and interoperability of your securities by using existing infrastructure
Tokens existing on a blockchain network can inherently interact with other tokens or utilities that have been created, such as exchanges or lending structures. This means that tokenholders can take advantage of open infrastructure that has already been built. Escrow facilities, exchanges, interest-bearing structures, or collateralization contracts are just a few examples, and more are being built every day.
Create a strong global community and gain access to new investors and funding
Digital communities and social media are undeniably strong forces in our new digital world. The communities and coordination that emerge around tokens are an impressive development. Being able to leverage digital ownership with digital communities to source funding or coordinate action are valuable tools for any company and tokenization helps a company harness the power of such communities.
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