Asset Tokenization: 6 solid benefits of tokenizing assets

Asset Tokenization ; Tokenminds

Asset tokenization is a procedure of digitizing your tangible or virtual assets and subdividing them into smaller parts in the form of tokens. Thus, a token symbolizes a smaller portion of your digitized property. The owner of the token enjoys related ownership rights or other privileges. Thanks to tokenization in blockchain, buyers of the tokenized assets are assured of the security of assets and ownership rights.

The idea of asset tokenization has become popular in recent times. Users enjoy multiple advantages once they tokenize their assets. For example, tokenization in blockchain allows users to keep and exchange these non fungible assets fractionally or wholly as per their preferences. Here, we explore the key benefits of asset tokenization.

What are the key benefits of asset tokenization?

There are multiple benefits that retail investors and industrial fields can enjoy from tokenization on blockchain. Here are the primary benefits of asset tokenization:

Enhanced liquidity

A key benefit of tokenized assets on the decentralized ledger is enhanced liquidity. Roughly, the value of private equity is $4 trillion. Furthermore, real estate has vast trillions captured. Thus, real estate tokenization companies can unlock these vast amounts through asset tokenization. The tokenization of these assets can open them to a global audience and other new markets.

Improved efficiency via automation

Asset tokenization on decentralized ledgers applies digital contracts that automate transaction processes.

The use of intelligent contracts eliminates intermediaries from the transaction. Usually, intermediaries increase the cost of a trade. So, removing these third parties cuts down expenses.

Full openness

Records of tokenized assets are kept on a blockchain, an open ledger, for all the concerned parties. Through these records, you can know the attributes of each asset and the rights of an owner.

Also, it’s impossible to claim the ownership of assets fraudulently. Remember, the decentralized ledger provides a track record of the previous owners of the non fungible assets.

Better accessibility

A powerful perk of tokenization on the blockchain is that the concerned users can access their tokenized assets 24/7. This happens from anywhere in the world. Also, a user can fractionalize a specific part of their tokenized shares. This enables the investors to own the minimum shares in multiple investments. Furthermore, tokenizing assets facilitate small-percentage investments that encourage numerous people to participate in the market.

Shorter lock-up duration

During the lock-up period, investors cannot access their assets because the asset is large and illiquid. So, through asset tokenization, you can reduce the lock-up duration because investors can trade their assets quickly in the market.

Informed decisions

Blockchain technology supports tokenization. The decentralized ledger is immutable. So, it’s impossible to alter an asset’s history to make it more appealing. Therefore, the information on blockchain helps potential investors to make informed choices.

Which assets can you tokenize?

You can virtually tokenize anything, including physical and virtual properties. The possibilities are endless, from standard assets like bonds and real estate to exotic properties. Here are the categories of assets that you can tokenize:

  • Assets: These are things of value that you can easily convert to cash. Assets can either be personal or business items.
  • Equity: You can tokenize shares and keep them in the blockchain environment. Tokenized equity allows companies to widen their markets. Investors can access tokenized equity via DeFi platforms in various exchanges.
  • Tokenized stocks: Tokenization of stocks is a popular technique for trading stocks of some companies like Tesla and Amazon. Furthermore, tokenizing stocks allows investors to enjoy the same benefits as ordinary shares.
  • Funds: investors can tokenize their investment fund, and each investor has tokens representing their stake in the fund.
  • Non-fungible assets: these assets are one of a kind and cannot be divided into smaller units. Examples of non fungible assets include real estate, cars, and art pieces.

Steps of asset tokenization

The idea of asset tokenization is disruptive and can take your business to the next level. Financial forecasts indicate that global tokenization is expected to hit $5.6 billion by 2026. Are you wondering how you can tokenize your assets and take a piece of the piece from the industry? If yes, here are the steps to follow:

Select an asset

Before you tokenize an asset, research is vital to identify an asset to focus on. Currently, there are multiple assets you can tokenize. However, each sector has a different level of popularity. For example, real estate tokenization companies can benefit from tokenizing their properties.

Create your business framework

Before creating a solution, you must identify the proper business framework. Here are the factors to consider when developing a business model:

Your responsibility

You can either offer token storage services or provide consultancy solutions on how to create tokens.

Your monetization plan

Smart contracts can help you to automate your transactions. Alternatively, you can create life cycle tasks using blockchain technology for more fabulous perks.

Platform functionality

You can be a central supplier and offer access to multiple tokenization websites. Alternatively, you can store user accounts on digital currencies.

Develop your platform

Once you’re through the preliminary steps, your next move is to start the development process. Because the development field is technical, it’s advisable to hire experienced developers from TokenMinds.

The engineers at TokenMinds qualify to transform any business concept into a full-grown solution. They understand how to create smart contracts that are relevant to your asset.

Platform incorporation

Your business framework determines how to incorporate your platform. Some things to consider include solution type, your target crowd, and your infrastructure.

Study the legal environment

Different legal environments have various requirements. So, before you enter a specific market, you must study its legal background and ensure that you comply with its requirements.

Market your platform

Marketing your tokenized assets can be challenging for many people. There are multiple steps to take before you create a marketing strategy. For example, you need to study your audience, create a whitepaper, and determine the messages to share. The best option is to hire a marketing firm to help promote your assets.

Conclusion

Asset tokenization has become a popular technique of digitizing your real or virtual assets into tokens and selling them in smaller portions. There are multiple benefits of tokenization in the blockchain. From improved security, transparency, and enhanced security, there are many benefits to reap from tokenizing your assets.

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