ASSET CREATION EXPLAINED
To help explain asset creation, it is beneficial to use an example. Fine pieces of art are usually classed as assets. Astronomical amounts of capital are invested in highly sought after paintings, sculptures, or artifacts.
Fine art is considered valuable due to its inherent rarity, age, and specialty. It has mostly been the domain of wealthy individuals who pay high prices for the privilege of owning the piece after an auction. It therefore excludes small investors from owning an individual piece or a part of it. Furthermore, wealthy investors take on all the risk by owning a valuable asset. They take on all the risks and are liable for when the piece of fine art potentially becomes damaged, lost, or stolen.
One advantage of tokenizing fine pieces of art on the blockchain is that it allows for the asset to be owned by multiple parties. Each token grants the holder a portion of ownership. It allows smaller investors to have a stake and share the risk of ownership with other parties. It is then possible for investors to increase their stake in the asset or liquidate their investment to others by selling their tokens on open trading markets.