How DeFi can help communities around the world: can tokenization have a social benefit
How tokenization works with DeFi
The difference is evident between traditional finance and DeFi. There are far fewer barriers to entry to the financial system with decentralized finance than TradFi. Traditional finance is opaque with many entrepreneurs not being able to obtain loans, even for nefarious reasons.
Instead of money being tightly controlled, DeFi allows for a more open and transparent system where anyone with an Internet connection can access financial services. Whether you’re someone who can’t get access to capital or someone who lives in a country without a stable economic infrastructure, DeFi can prove invaluable.
What are the social benefits of tokenization?
The social benefits of tokenization are clear. It allows people more opportunities for ownership, more access to liquidity, access to capital, additional control over their identity, and more. Africa has traditionally struggled with financial infrastructure, and crypto adoption has grown significantly there over the past several years.
Here are some key ways tokenization is critical for DeFi growth. First, it offers the opportunity for fractional ownership. If you can’t afford an expensive piece of art, you could afford a fraction of that art piece if the art was tokenized.
Second, tokenization means you can put real-world assets on the blockchain. Let’s say you own a home but run into financial difficulties. Instead of an expensive and challenging process where you reverse mortgage your home, you can tokenize your real estate on the blockchain and get access to its value as soon as possible.
What if you can tap ANY asset of yours for additional liquidity when needed? That’s the future tokenization offers: a world where you can tokenize your car, art, real estate, and more.
There’s another very obvious benefit: the fact that cutting out intermediaries usually means people pay lower costs, spend less time closing deals, and enjoy faster settlement times. Whether you’re looking for a loan or trying to sell a house, tokenization can offer a new level of transparency and convenience.