What is asset tokenization?
Tokenization is a way of separating a piece of text into smaller units called tokens. Asset tokenization is the process of converting ownership rights in a particular asset into digital tokens. Each token is basically the representation of a proportional part of the digitized asset. Investors get to invest in these digital asset tokens at a fraction of the cost. This can be done in various ways, but all result in the legally-upheld bridge between the physical asset (real estate property, vehicle, company, etc.) and its representative token. A token is a transferable unit of something.
What are Digital Assets?
Digital asset is "any digital material owned by an enterprise or individual including text, graphics, audio, video and animations." There are 3 key elements that make any single file a digital asset. A digital asset must:
- Be a digital file owned by an individual/company,
- Provide value to the individual/company, and
- Be searchable and discoverable (usually with metadata).
What Is Over-the-Counter (OTC)?
- Over-the-counter (OTC) refers to the process of how securities are traded via a broker-dealer network as opposed to on a centralized exchange. Over-the-counter trading can involve equities, debt instruments, and derivatives, which are financial contracts that derive their value from an underlying asset such as a commodity. Crypto OTC is simply the trading of crypto assets directly between two parties. A trade can be crypto-to-crypto (swapping Bitcoin with Ether for example) or fiat-to-crypto (swapping US dollars for Bitcoin and vice versa). As with all other OTC markets, trade always occurs between a dedicated trading “desk” and another individual or institution, referred to as a counterparty.
What is fundraising/crowdfunding?
Fundraising or crowdfunding is the practice of funding a project or venture by raising money from a large number of people (investors), typically through a fundraising platform. The process is generally based on three types of actors - the project initiator who proposes the idea or project to be funded, individuals or groups who support the idea, and a moderating organization (the "platform") that brings the parties together to launch the idea. Fundraising or crowdfunding has been used to fund a wide range of for-profit, entrepreneurial ventures such as artistic and creative projects, medical expenses, travel, and community-oriented social entrepreneurship projects.
What are decentralized exchanges (DEXs)?
Traditional trading platform is the software that enables investors and traders to place trades and monitor accounts through financial intermediaries. Decentralized exchanges (DEX) is blockchain-based software that coordinates large-scale trading of crypto assets between many users. They do that entirely through automated algorithms, instead of the conventional approach of acting as financial intermediary between buyers and sellers.
What is an Automated Market Maker (AMM)
Automated market makers are a part of decentralized exchanges (DEXs) that were introduced to remove any intermediaries in the trading of crypto assets. You can think of AMM as a computer programme that automates the process of providing liquidity. It is a mathematical function that predefines asset prices algorithmically. AMM is one of the most innovative inventions from DeFi in recent years. It enables 24/7 market hours, higher capital accessibility, and efficiency. There are various types of AMMs, and different DEXs have implemented the various ‘flavors’.
What is DeFi?
Decentralized finance (DeFi) offers financial instruments without relying on intermediaries such as brokerages, exchanges, or banks by using smart contracts on a blockchain. With DeFi, you can do most of the things that banks support — earn interest, borrow, lend, buy insurance, trade derivatives, trade assets, and more — but it’s faster and doesn’t require paperwork or a third party. As with crypto generally, DeFi is global, peer-to-peer (meaning directly between two people, not routed through a centralized system), pseudonymous, and open to all.
What Is Distributed Ledger Technology (DLT)?
Distributed Ledger Technology (DLT) refers to the technological infrastructure and protocols that allows simultaneous access, validation, and record updating in an immutable manner across a network that's spread across multiple entities or locations. In simple words, the DLT, more commonly known as the blockchain technology, is all about the idea of a "decentralized" network against the conventional "centralized" mechanism, and it is deemed to have far-reaching implications on sectors and entities that have long relied upon a trusted third-party.
What is a digital wallet
A digital wallet is a software-based system that securely stores users' payment information and passwords for numerous payment methods and websites. By using a digital wallet, users can complete purchases easily and quickly with near-field communications technology. They can also create stronger passwords without worrying about whether they will be able to remember them later.
What is a cryptocurrency wallet?
A cryptocurrency wallet is an app that allows cryptocurrency users to store and retrieve their digital assets. As with conventional currency, you don’t need a wallet to spend your cash, but it certainly helps to keep it all in one place. When a user acquires cryptocurrency, such as USDC, she can store it in a cryptocurrency wallet and from there use it to make transactions.
What is USDC?
USD Coin (USDC) is a type of cryptocurrency that is referred to as a stablecoin. You can always redeem 1 USD Coin for US$1.00, giving it a stable price.
What is a token?
Crypto tokens are a type of cryptocurrency that represents an asset or specific use and resides on their blockchain. Tokens can be used for investment purposes, to store value, or to make purchases.
What are the types of tokens?
There are two types of tokens:
- Utility tokens give holders access to products and services that are blockchain-based,
- Security tokens are traditional assets like stocks and shares represented by digital tokens on the blockchain.
The main difference between a utility token and a security token is that security tokens give rights of ownership to a company. Think of them sort of like digital, decentralized shares of stock. Security tokens are also classified as securities by financial regulators like the Securities and Exchange Commission (SEC), making them subject to all the same rules as stocks, bonds, ETFs, and other securities.
While utility tokens are not currently (as of April 2022) classified as securities, there has been some speculation that one day, they could be. Even though these tokens are not intended to represent an investment the way that security tokens are, that’s not what matters most to regulators.
What is a security token?
- In traditional finance, a security is defined as a stake of ownership in a publicly-traded corporation (like shares of stock), a creditor relationship with a public entity (such as a bond), or in the case of options contracts, a right to ownership.
- Security tokens are tokenized securities. They are digital forms of traditional securities that live on a blockchain. These tokens could represent ownership of a fraction of any valuable asset, like a car, real estate, or corporate stock.
What is a utility token?
A utility token is a crypto token that serves some use case within a specific ecosystem. These tokens allow users to perform some action on a certain network. Utility tokens are not mineable cryptocurrencies. They are usually pre-mined, being created all at once and distributed in a manner chosen by the team behind the project.
What is token issuance?
Token issuance is one of the most important processes in the world of blockchain technology and cryptocurrencies. Essentially, token issuance is the process of creating new tokens that are then added to the total supply of the cryptocurrency. Depending on the blockchain and cryptocurrency, token issuance may take different forms. Usually, token issuance is regulated by complex algorithmic calculations that determine the amount of tokens necessary for the blockchain ecosystem to function properly. The total supply of tokens for each cryptocurrency is different. The amount of tokens comprising the total supply is also calculated through complex algorithmic functions.
What is a crypto wallet?
A cryptocurrency wallet is a device, physical medium, program or a service which stores the public and/or private keys for cryptocurrency transactions. In addition to this basic function of storing the keys, a cryptocurrency wallet more often also offers the functionality of encrypting and/or signing information.
What is the ERC-20 token?
An ERC20 token is a standard used for creating and issuing smart contracts on the Ethereum blockchain. Smart contracts can then be used to create smart property or tokenized assets that people can invest in. The ERC20 standard has been a dominant pathway for the creation of new tokens in the cryptocurrency space for some time. It has been particularly popular with crowdfunding companies. There have now been tens of thousands of distinct tokens that have been issued and are operating according to the ERC20 standard. While many ERC20 smart contracts are used to execute various routines and functions in digital space, many of them have been used to create non-fungible tokens (NFTs) for the purpose of an initial coin offering (ICO).
Fungible vs non-fungible tokens (NFT): What is the difference?
- In a blockchain, fungible tokens are cryptocurrencies and are fungible, meaning that it is interchangeable. Non-fungible tokens (NFT) are units of data that represent a unique digital asset stored and verified on the blockchain.
- Fungible tokens or assets are divisible and non-unique. For instance, fiat currencies like the dollar are fungible: A $1 bill in New York City has the same value as a $1 bill in Miami. A fungible token can also be a cryptocurrency like Bitcoin: 1 BTC is worth 1 BTC, no matter where it is issued.
- Non-fungible assets, on the other hand, are unique and non-divisible. They should be considered as a type of deed or title of ownership of a unique, non-replicable item. For example, a flight ticket is non-fungible (NFT) because there cannot be another of the same kind due to its specific data. A house, a boat or a car are non-fungible physical assets because they are one-of-a-kind.
How does ampnet onboarding work?
You have to pass through the KYC (Know Your Customer) process, so please prepare official documentation from your country, such as an ID card, passport or driver’s license. You will also need to create your wallet within the platform, or connect an existing one (Metamask) to the platform.
What is Know Your Customer (KYC)
The know your customer or know your client (KYC) guidelines in financial services require that professionals make an effort to verify the identity, suitability, and risks involved with maintaining a business relationship. The procedures fit within the broader scope of a bank's anti-money laundering (AML) policy. The objective of KYC guidelines is to prevent businesses from being used by criminal elements for money laundering. Related procedures also enable businesses to better understand their customers and their financial dealings.
What is carbon offsetting (offset credit)?
A carbon offset and carbon offset credit (or simply “offset credit”) is a reduction or removal of emissions of carbon dioxide or other greenhouse gases made in order to compensate for emissions made elsewhere. Offsets are measured in tonnes of carbon dioxide-equivalent (CO2e). One ton of carbon offset represents the reduction or removal of one ton of carbon dioxide or its equivalent in other greenhouse gases.
On this page
- What is asset tokenization?
- What are Digital Assets?
- What Is Over-the-Counter (OTC)?
- What is fundraising/crowdfunding?
- What are decentralized exchanges (DEXs)?
- What is an Automated Market Maker (AMM)
- What is DeFi?
- What Is Distributed Ledger Technology (DLT)?
- What is a digital wallet
- What is a cryptocurrency wallet?
- What is USDC?
- What is a token?
- What are the types of tokens?
- What is a security token?
- What is a utility token?
- What is token issuance?
- What is a crypto wallet?
- What is the ERC-20 token?
- Fungible vs non-fungible tokens (NFT): What is the difference?
- How does ampnet onboarding work?
- What is Know Your Customer (KYC)
- What is carbon offsetting (offset credit)?
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