Fractional ownership — customer empowerment in the sharing community
For a long time, financial transactions were purely a matter of trust, often across many nodes. Investors had to trust banks, trustees, fund managers and many other intermediaries for their investment — always in the hope that the entrusted party would act in their interest. Blockchain technology and the concept of fractional ownership, on the other hand, promise customers more control and freedom of design.
The principle of fractional ownership refers to a community of independent people, groups, or companies that share ownership of a high-quality asset. While communities of property have established themselves primarily in the area of real estate and securities, the concept of distributed ownership is also becoming increasingly popular in digital asset management — but also somewhat more complex.
Many investors today want to be able to make individual investment decisions flexibly and to do so. In other areas, this has long been a matter of course: Who still goes to a travel agency or to their bank advisor? Today, you can easily compare and book trips via various online portals, and to manage your own banking transactions, there are dozens of providers who offer intuitively understandable web interfaces and apps that allow services to be carried out quickly and without help.
With the help of blockchain and fractional ownership, this is now also possible for investments. The advantages of blockchain include independent management of one's own investments, transactions that are always traceable and a high level of fungibility of fractional possessions at any time. For the first time, the concept of fractional ownership offers retail investors in particular the opportunity to gain access to previously closed investment markets such as private equity, real estate projects or works of art.
Tokenization and Dematerialization of Securities Law
The basis for fractional ownership is the technical possibilities of tokenizing and dematerializing real assets. This involves dividing tangible assets such as real estate, works of art, cars or even jewelry into digital shares and offering them to many individual investors as an investment. In this way, actual objects are converted into digital investment tokens.
Each investment token represents its own fractional share of ownership. A property can then have hundreds or thousands of shareholders, who each own a different number of investment tokens in the property and benefit from rental income and increases in the value of the property in accordance with their number of tokens. Who owns how many investment tokens and which owners sell their tokens to other network participants is logged on a blockchain.
Digital securitization of assets thanks to blockchain protocol
In contrast to the stock exchange, blockchains are particularly convincing due to simplified transaction options. The concept itself is not necessarily new. Established stock trading, for example, also allows the management of partial ownership of securities and company shares. Blockchain technology, on the other hand, enables numerous other and, above all, more complex transactions. In this way, investment tokens of company shares and other assets can be managed and traded. This principle is changing not only the financial market, but also many other sectors of the economy.
Fractional ownership refers not only to investments, but also to loss-making transactions in the event of claims. For example, a community of several users could pay for insurance costs, accidental damage or even repairs of various objects or properties.
This allows not only profits and investments to be divided, but also responsibilities. This is not limited to private individuals, but can also apply to companies. Fractional asset ownership in particular offers insurance providers new opportunities for cooperation and organizations.
Blockchain technology not only promises more flexibility, but also better traceability. Transactions are signed and approved by participants. The blockchain processes, logs and links this data together. Ownership can be proven at any time using this digitally available protocol. Accordingly, changes in ownership of one or more tokens can be clearly traced back.
Marketplace of the future — trade with investment tokens
With digital fractional ownership, not only are the investments themselves changing, but also the role of asset managers. Transactions that were previously based on trust could soon be traced using decentralized yet secure and legally regulated technology. Accordingly, traditional custody or asset managers may act more as digital token advisors in the future and take on fewer direct transactions.
Implementing visions of the future would also be more flexible with fractional ownership. For example, financing for projects such as concert tours and feature film productions or even hospitals and kindergartens could easily be provided by many thousands of investors. Thanks to tokenization, an individual investment can be sold to a large number of investors — with clear administrative costs.
Fractional ownership is suitable for both professional and novice investors who want to purchase investment tokens from several different industries with as little investment as possible.
