With the broader digital currency ecosystem leaning towards tokenization, Ripple CTO David Schwartz has implied some of the important benefits of this technological advance.
With the broader digital currency ecosystem leaning towards tokenization, Ripple CTO David Schwartz has implied some of the important benefits of this technological advance.
Benefits of tokenization
The concept of tokenization has been doing the rounds, however, only a few understand or know what it really means. In Ripple Labs’ new X series to explain a blockchain concept in 60 seconds, Ripple’s CTO used real estate to explain the concept of tokenization.
He said with so much paperwork involved in purchasing an asset, it becomes quite difficult to prove ownership of such properties. He believes tokenization eliminates this challenge by solidifying the process of asset transfer and ownership. He said that with distributed ledger technologies, it is possible to record real estate sales, pay for properties and eliminate all fraud factors.
He went on to point out how this ledger simplifies the process of borrowing on an asset. With tokenization, the person’s collateral can be recorded on-chain and the lender can easily verify ownership of the collateral. Depending on the key designs of the tokenization functions, the lender can also obtain information that will show if the person is borrowing from multiple lenders at the same time.
Many financial giants are already testing tokenization features, and BlackRock is also joining the trend. Protocols like Chainlink are specifically helping to push this tokenization agenda with their CCIP solution, among others.
Ripple Labs Positioning
While Ripple Labs has not categorically laid out the roadmap on its own tokenization agenda, the company has immediate plans to launch a stablecoin later this summer. In its latest push, Ripple Labs has filed a trademark for its stablecoin, showing that it hopes to use the “RLUSD” symbol.
The stablecoin ecosystem is growing and Ripple is optimistic about being able to enter the market in a dominant way.