Asset Tokenization: Impact on Crypto Trading and the Role of Trading Bots

2024 is one of the most pro-crypto years for a number of reasons. Bitcoin halving certainly is one. If you followed the buzz or even if you’re a veteran, this piece is for you.

In this article, we will talk about tokenization of assets, its impact on crypto trading, crypto daytrading bots and how to choose a profitable bot.

Also, I’ve kept this guide extremely simple and basic. Apart from the pros, even the newest of readers should be able to understand it clearly.

Let’s get started then? 

What is Tokenization of Assets? 

Assets, as you probably know, are anything that you own of value. Tokenization of assets is converting your assets into digital tokens. These assets can be both digital, as well as physical. (I’ve listed examples in the next section).

Tokenization is simply the process of converting the item into a digital “token”. You can create a single token for your entire product, or fragment it and create a percent-based token. Meaning, your product may be fragmented into 10 total tokens, each representing 10% of the product’s value. 

So, whenever the product’s value rises or falls, the value of each token rises and falls as well. 

It basically allows individuals and groups to invest and take part in the profits/losses of products that were earlier more centralized.

This token can be shared, sold, or traded with anyone freely. 

But what exactly are these “tokens”? Imagine these to be a digital certificate/token/cryptocurrency or anything that proves your ownership of the item. 

And yes, the ownership, transfer, validity, and legality of these tokens can be validated by anyone transparently on the Blockchain. This is what grants Tokenization its value to begin with. 

What Are Tokenized Assets Examples?

It’s better if we explain this using an example, isn’t it? 

Imagine you have the source code for a social media app, e.g. Instagram. It would be worth billions as a whole. However, you convert it into tokens. Let’s say you create 100 tokens for your source code.  100 people can then jointly purchase each part of your source code. 

Now, each of those 100 people owns 1 token for your source code. They’re all 1% owners of the code. 

This ownership can be validated transparently and publicly hence preventing any tampering or falsification.  

A real-life example, that’s nearly 9 years old at this point is the music-Tiny Human released by Heap. It was released as an Ethereum token! Hence, anyone who bought the token, bought ownership of the music. They would get paid a share of the profits as long as they’d hold the token! 

Some other potential examples are luxury goods, art, and of course, real-life buildings! 

What are the benefits of Tokenization of assets?

Let’s briefly discuss why exactly tokenization matters.

• It Opens up new income streams for the token creator. 
• Allows individuals to take part in and invest in projects they believe in, or are just interested in.
• It also opens up fractional investment. You can’t afford an entire building but you can afford rooms, it’s similar when you buy a fraction of the total tokens for an asset.
• Creates a very transparent revenue-sharing model for almost any asset. 
• Tokenization can also automate revenue sharing. No more calculations and confusion. Each owner gets what they deserve, automatically. 

What’s the Impact of Asset Tokenization on Crypto Trading?

We just discussed the general benefits of Tokenization. However, what impact does it have on crypto trading directly?

Well, for starters, it massively increases liquidity. It’s much harder to buy/sell an entire building or a piece of art as compared to buying/selling a token for the art! This also increases the competition for projects as smaller investments can now be accepted and from a wider pool of investors.

Blockchain adoption and exposure increased as well. Investors, who may not be directly into crypto trading can now be interested in the industry. This of course has ripple effects on the entire crypto industry.

More adoption also has the potential to lead Crypto trading towards more lenient regulations and laws.

How to Profit from Asset Tokenization Using Profitable Trading Bots?

Tokens, like most other tradable assets and Cryptocurrencies, are volatile. They frequently move up and down in value. 

Of course, you can trade it all manually. However, employing a bot has certain advantages that you just lose out on as a human.

• Much faster trades: You may be fast, but you’re never as fast as a trading bot. A bot can place buy and sell orders by the millisecond. This allows you to take advantage of the smallest movements and gain profits.
• Lack of emotions: 50% of a trade happens in our minds. That’s our weakness as humans. A bot is void of these emotions. It places trades based on the rules you’ve set, not how you’re “feeling” at a time. 
• Better analysis: Advanced trading bots are capable of adopting and analysing trading indicators. This gives them an edge that you may not have even with enough indicator knowledge.
• Multi-exchange trading: Some bots are capable of multi-exchange trading. This means they can place orders on more than one exchange simultaneously. This opens them up to arbitrage opportunities. At times, the value for the same token/Cryptocurrency is slightly different on different exchanges. A good bot can leverage this opportunity by buying from the cheaper exchange and selling at the more expensive exchange.
• Pre-made strategies: Some trading bots also flaunt pre-configured trading strategies. You can simply choose a strategy that you like and it’ll start working for you.

There of course are a ton of other benefits. However, I’m sure you’ve got an idea by now, haven’t you? 

How Do You Choose the Most Profitable Crypto Trading Bot?

Let’s get down to the most important question then. How do you choose a crypto trading bot that’s profitable to you? 

Well, here are a few pointers:

• Easy to use and understand: The UI and overall ease of the bot matter massively. If you don’t understand it completely and entirely, you’re bound to make mistakes and miss out on opportunities. Hence, the bot must have a very user-friendly and easy interface.
• Number of supported exchanges: Of course, the more exchanges your bot supports, the better. A good crypto daytrading bot supports anywhere between 12-15 exchanges at the least.
• Multi-exchange support: Simply supporting exchanges isn’t enough. It’s better if the bot is capable of letting you use multiple exchanges simultaneously. 
• Support for indicators and strategies: A good bot should always have the ability to integrate and understand indicators. Those with in-built strategies are even better.
• Control: This is just a hunt for “features”. Overall, any bot that offers more features and more control is the better option, isn’t it? Look for bots that offer paper trading, demo accounts, backtesting etc.
• Customer support: The bot should offer good customer support. In case something goes wrong or you get confused, it should be resolved fast. A good metric is to look for bots with a live-chat system.
• Pricing and free trials: The bot should not be too expensive and it’s best if there’s a free trial. 

Final words

I’m sure you’ve got an idea of tokens, their impact on crypto as well as trading bots. Basically, tokenization is the revolution that’s happening around us even as you read this. It’s just a more transparent, faster, easier way to buy/sell and hold assets. 

Of course, there’s room for improvement but everything takes time, doesn’t it? For now, I’d suggest picking a good trading bot and seeing what it can do for you. Always do your own research, the crypto market is pretty volatile and no one’s advice should affect your own strategies and actions.