Tokenization has taken a big boom in the past two years, and this growth is expected to grow even higher by 2030. So, this is the high time that crypto enthusiasts or investors geeks focus more on tokenizing their assets, and unlock their growth to a financially free future!
In this blog, we will uncover the concept of asset tokenization, and how any individual can tokenize an asset.
What Is Asset Tokenization?
Asset tokenization is the process of turning assets into digital tokens that can be traded globally through blockchain.
Traditional way of doing investments in assets like gold, silver, art, real estate required huge amount of money. Also if people wanted to invest in something that is located in some other country or region, they had to go through the complicated legal procedure, or had geographical barriers. Tokenization breaks down all these budgets, geographical, and regulatory constraints, allowing users to invest in tokenized assets that are present across the globe.
These assets would include assets such as real estate, art, commodities, or infrastructure. Let us see the types of assets that can be tokenized in detail:
Types Of Assets That Can Be Tokenized
Asset tokenization allows physical and digital assets to be represented as blockchain-based tokens, making them more accessible, divisible, and tradable. Here are the main types of assets that can be tokenized:
1. Real-World Assets (RWA)
Real world assets include assets that exist in the physical world itself like real estate properties, carbon credits, gold, silver, paintings, rare artifacts, luxury items, patents, copyrights, and corporate bonds can be tokenized.
2. Financial Instruments
Financial instruments like shares in companies, ETFs, investments funds, startup shares, investment funds, insurance policies, swaps on blockchain, and claims can be tokenized.
3. Digital & Virtual Assets
Digital currencies like BTC, ETH, digital art, gaming assets, music, collectibles, decentralized identity solutions, metaverse assets, in-game assets, can be tokenized.
4. Utility & Governance Assets
Apart from all the above, tokenized loyalty programs, reward points, governance tokens, memberships, SaaS access, premium digital content can also be tokenized.
Thus, unlike real world, asset tokenization allows ownership of both liquid, and illiquid assets.
How To Tokenize An Asset?
Here is the step-by-step guidance to tokenize an asset:
Step 1: Identify The Asset For Tokenization
Step 2: Assess Regulatory and Compliance Requirements
Step 3: Verify Asset Ownership
Step 4: Determine The Asset’s Value
Step 5: Prepare Legal Documentation
Step 6: Choose A Blockchain Platform
Step 7: Select The Token Standard and Type
Step 8: Design The Tokenomics Model
Step 9: Develop And Deploy Smart Contracts
Step 10: Mint And Distribute The Token
Step 1: Identify The Asset For Tokenization
To begin with the process of tokenization, you first must choose the asset that you would like to tokenize. These assets can include real estate, collectibles, gold, silver, and more. To keep it easy, you can choose an asset that can be easily divided into smaller units. Also, if you have, try to choose art and collectibles as they are high in demand, and attract different investors from across the globe.
Step 2: Assess Regulatory and Compliance Requirements
The next step is to understand the legal and regulatory necessities required for tokenization, and ensure your asset aligns with the rules. You should start by first identifying crypto and tokenization related laws in your own country. Different countries have different laws, so it is preferred to consult a lawyer, or an experience blockchain develop company, like Blocktech Brew for a reliable consulting.
Step 3: Verify Asset Ownership
For tokenization you would need to verify who is the legal owner of the asset. So, collect all the legal or related documents that can verify that the asset totally belongs to the respective owner or have multiple owners. These documents can include purchase documents, registration papers, certificates, and more. For this, you can also take help from the lawyer, and blockchain consulting firms, like Blocktech Brew.
Step 4: Determine The Asset’s Value
Once ownership is verified, the next step is to figure out how much the asset is worth. You can do this by checking market prices, getting expert opinions, or comparing similar assets. A fair price makes the token more attractive to investors and avoids overpricing or underpricing. It’s a good idea to ask financial experts for help to get an accurate value.
Step 5: Prepare Legal Documentation
Now prepare legal documents to ensure the tokenized asset follows all rules and regulations. These documents should confirm ownership, explain how the asset can be traded, and protect investor rights. It’s best to work with a lawyer or a blockchain consulting firm, like Blocktech Brew, to make sure everything is legally secure and transparent.
Step 6: Choose A Blockchain Platform
Now explore different blockchain platforms like Ethereum, Solana, Binance Smart Chain etc., and analyse their security, scalability, fees, interoperability. Consider all the key factors and see which of the blockchain aligns the best with your needs. Every blockchain has its own unique features, operational mechanism, and its own pros, and cons. Hence, you will do a comprehensive analysis of each platform and compare them with each other to be able to choose the best-suited blockchain platform for you.
Step 7: Select The Token Standard and Type
Now, choose the right token standard and type based on your asset and blockchain network. Common standards include ERC-20 for fungible tokens, ERC-721 for unique NFTs, and ERC-1155 for multi-use tokens. If you’re using blockchains like Binance Smart Chain, Solana, or Polygon, they have their own token standards like BEP-20 and SPL. The choice depends on factors like use case, compatibility, and investor needs.
Step 8: Design The Tokenomics Model
Plan how your token will work, including total supply, pricing, and distribution. Decide how tokens will be used, such as for transactions, staking, or rewards. A well-structured tokenomics model attracts investors and ensures long-term value. It should also include mechanisms like burns or incentives to maintain demand.
Step 9: Develop And Deploy Smart Contracts
Smart contracts are basically the code that is written to transparently automate the buying and selling of tokenized assets. They play a very crucial role in facilitating all the transactions, thus smart contracts must be created error-free to avoid any security breached. Blocktech Brew offers advanced smart contract development services, along with smart contract auditing to help businesses create fast smart contracts for their blockchain projects.
Step 10: Mint And Distribute The Token
Create (mint) the tokens on the blockchain once everything is ready. Then, distribute them to investors, exchanges, or platforms as planned. Ensure the process is secure and follows regulations to avoid legal issues. Transparency in token distribution helps build trust with investors.
Benefits For Tokenizing An Asset
Explosively Growing Market
A study by Statista estimated the asset tokenization market size to reach at USD 11 Billion by 2030. This is a massive boom itself and brings a golden opportunity for investment enthusiasts. Moreover, this study has shown that out of all the assets real estate will be covering 1/3rd of the asset tokenization market.
Global Accessibility
Tokenized assets get exposed to global investors without any geographical barriers. Thus, your asset will have global demand which might directly increase its value, yielding higher returns.
Low Barrier To Entry
Unlike the real world where any investment domestic or global takes a long-complicated process, full of hassle and paperwork, tokenizing assets is way more easier, better, and yield high returns. You just need to have some basic documentation for verifying asset ownership, and legal compliance, the rest remains sorted.
Improved Transparency, And Security
Since all transactions happen on the blockchain, it enhances transparency and security, allowing investors easy and safe access to assets. Moreover, blockchain’s immutable ledger ensures that records cannot be altered, providing trust and reliability.
Cost Effective Transactions
Tokenization uses cryptocurrencies for smooth cross-border transactions through tokenization platforms. Since there are no banks or intermediaries, transaction costs are much lower. While banks charge high fees, tokenization platforms offer a more affordable alternative.
Fractional Ownership
Asset tokenization allows investors to own fraction of tokens. This eliminates the need of huge capital required and investors can start investing from small. This attracts wide investors from across the globe that come together to buy tokenized assets like a highly commercial property at a posh location.
The Best Way to Tokenize Your Asset – Partner with Blocktech Brew
Tokenizing an asset can feel overwhelming with all the legal, technical, and security aspects involved. The easiest and most reliable way to do it? Partner with Blocktech Brew!
From choosing the right blockchain to setting up smart contracts and ensuring legal compliance, we do everything for you! Whether it’s real estate, art, or any other asset, we make the process smooth, secure, and cost-effective.
With Blocktech Brew, you get expert guidance, a hassle-free setup, and access to a global market. Let’s turn your assets into digital tokens the right way!
Conclusion
Asset tokenization is transforming the way people invest by making assets more accessible, secure, and cost-effective. It removes traditional barriers like high capital requirements, legal complexities, and geographical limitations. With blockchain ensuring transparency and security, tokenized assets open up new opportunities for global investors. As this market continues to grow, businesses and individuals can benefit from increased liquidity, fractional ownership, and seamless transactions. Now is the right time to explore asset tokenization and leverage its potential for financial growth.
I am the CEO and founder of Blocktech Brew, a team of blockchain and Web 3.0 experts who are helping businesses adopt, implement and integrate blockchain solutions to achieve business excellence. Having successfully delivered 1000+ projects to clients across 150+ countries, our team is dedicated to designing and developing smart solutions to scale your business growth. We are focused on harnessing the power of Web 3.0 technologies to offer world-class blockchain, NFT, Metaverse, Defi, and Crypto development services to businesses to help them achieve their goals.
