Tokenization of commodities is the process of converting physical assets, such as minerals, into digital tokens that are stored on a blockchain. The digital tokens represent ownership of a fraction of the underlying asset and can be easily bought, sold, and traded like any other cryptocurrency 1.
Tokenization enables commodities to be split into small segments and offered for trade in exchange for tokens. For example, a platform may have bought a certain number of barrels of oil, and it can then offer smaller amounts of oil to investors who swap their fiat cash or cryptocurrency for tokens 2.
Tokenization brings a whole new level of efficiency, security, and transparency to the way we trade and invest in commodities. At the same time, it also opens up new opportunities for investors who might not have had access to these markets before 1.
In conclusion, tokenization of commodities is an emerging trend that has the potential to revolutionize the way we invest in commodities. By reducing market barriers and increasing liquidity and transparency, it opens up new opportunities for investors and issuers alike.