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Paper Type
ERF
Abstract
Motivated by the growing importance of research on blockchain applications, this paper conceptualizes the potential impact of blockchain enabled asset tokenization. Asset tokenization is the process of converting real-world assets to digital tokens and trading them fractionally based on a blockchain platform and its smart contract function. This research hypothesizes that tokenizing the asset increases its price by improving the democracy of the market and its liquidity, and eventually results in a price bubble, although it is not clear how long it will last. Furthermore, this impact is hypothesized to be greater on the previously lesser-known assets, because of the dominant investor sentiment and valuation subjectivity. Specifically, the art market is designated as a research context because blockchain applications has been expected to innovate the market by resolving its problems of centralization, inefficiency, and information asymmetry.
Recommended Citation
Kim, Soyeon, "Fractional Ownership, Democratization and Bubble Formation - The Impact of Blockchain Enabled Asset Tokenization" (2020). AMCIS 2020 Proceedings. 19.
https://aisel.aisnet.org/amcis2020/adv_info_systems_research/adv_info_systems_research/19
Fractional Ownership, Democratization and Bubble Formation - The Impact of Blockchain Enabled Asset Tokenization
Motivated by the growing importance of research on blockchain applications, this paper conceptualizes the potential impact of blockchain enabled asset tokenization. Asset tokenization is the process of converting real-world assets to digital tokens and trading them fractionally based on a blockchain platform and its smart contract function. This research hypothesizes that tokenizing the asset increases its price by improving the democracy of the market and its liquidity, and eventually results in a price bubble, although it is not clear how long it will last. Furthermore, this impact is hypothesized to be greater on the previously lesser-known assets, because of the dominant investor sentiment and valuation subjectivity. Specifically, the art market is designated as a research context because blockchain applications has been expected to innovate the market by resolving its problems of centralization, inefficiency, and information asymmetry.
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