Commodity digitization is the process of converting physical commodities into digital tokens or representations on a blockchain. This allows for fractional ownership, increased liquidity, and simplified transfer of assets like gold, oil, or real estate. By leveraging distributed ledger technology, it aims to enhance transparency and reduce the transactional friction associated with traditional commodity markets. Digital tokens linked to physical commodities can simplify global trade and supply chain finance.
Context
The adoption of commodity digitization is progressing, with various initiatives exploring tokenized representations of natural resources and industrial goods. Key discussions involve the legal frameworks necessary to establish clear ownership and redemption rights for digital commodity tokens. The ability to verify the underlying physical assets and ensure regulatory compliance presents a significant area of focus for its widespread acceptance.
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