Tokenization is a technique where a part of a business will be taken as tokens built on top of the existing blockchain networks such as Ethereum or Neo. Digital shares will be created to represent a stake in the asset. Tokenization has already made its mark in fields like artworks, live-streaming, content creation, and real estate. The main purpose of tokenization is to render access to a fair global market and provide liquidity for the different stakeholders on the secondary market.
Table of Contents
Advantages of Tokenization Platform Development
- The tokens can be easily transferred between different parties on the platform with high speed and low costs. The transfer of value is fair as smart contracts help in eliminating the enormous amounts of paperwork in the system.
- Tokens bought and sold will have specific value attached to them either in form of equity or access to cash flows. In case the supply of tokens is fixed and the demand rises, the holders of the tokens could become rich in no time. Hence, this is an attractive business model to adopt for firms.
- It gives freedom from large companies who control the distribution of content and rewards the content contributors their share of income by encouraging them to create new experiences without facing overwhelming network effects and economies of scale.
- Tokenization eliminates most of the bureaucratic control by promoting a decentralized business model encouraging more flexibility.
- It provides 24x7x365 access to the market, unlike traditional exchanges that operate only for limited hours in a day.
- Fractional ownership or micro ownership is facilitated through tokenization and the tokens can be easily traded in the secondary market.
- Since there is no interference of intermediaries in process, it leads to shorter settlement times and decrease in brokerage costs.
- A project-specific blockchain network can be created to see how close the firm is to hit its fundraising target. It can consist of details such as the number of investors, the average investment amount, and the competition date of the project based on the level of investment activity.
Factors to Consider Before Opting for a Tokenization Platform Service
- Understand your business model thoroughly especially regarding the important sources of revenue and define the payment touchpoints as tokens act as a means of payment. Make sure to be well-versed with the economics of the token and its interactions with the token holder. The participants must be offered well-defined economic incentives.
- Determine the use cases for your token as they should be incentivized to use your token by providing high value and rich benefits. Maintaining a low token velocity is important along with no chance for token price rise in the initial stages post the launch of the token.
- Fix a concrete plan on integration of tokens within your business by launching an ICO. Make sure that the aspects of technology development are considered carefully with a detailed timeline and multiple releases.
- Prepare an intuitive user interface as users will need a wallet such as MetaMask or Trust wallet to hold their issued tokens.
- Once you are ready to launch your token in the market, either launch it all at once if you are a small business firm or launch it in different phases in case you are a large business. Help your existing investors to make a smooth transition towards using your token. Organize an extensive marketing campaign to inform the investors about the benefits of your token.
The Different Components Offered by a Tokenization Platform Company
- A technological blockchain layer – This will ensure the scalability and cost-effectiveness of the operations and maintain a specific level of decentralization.
- A regulatory layer – This ensures compliance with the international regulations guaranteeing 100% legal harmonization.
- A taxation and legal layer – It helps in operating without any friction and uncertainty.
- An insurance layer – It supports anonymous trading and facilitates irreversible execution of transactions.
The various assets for which tokenization platform development can be undertaken
- Real Estate – Tokenization helps real estate as it is spread across multiple parts of the globe and is always in high demand. It ensures that investment in real estate becomes affordable for the common man. The benefits for investors include lower transaction costs, access to a wide variety of properties, and high-volume liquidity.
- Precious metals – Valuable metals like gold, silver, and diamond can be tokenized easily. It ensures a high level of transparency as the investors can properly analyze the current metal value and fix the prices accordingly.
- Artwork and luxury objects – Fine art projects and art galleries can be easily accessed by investors without any restrictions. There will be less physical preservation costs. The auctioning process is eliminated and the buyers and sellers can conduct transactions between themselves directly.
- Sports teams and celebrities – Investors can gain access to a decentralized marketplace and put their money on the leading players and clubs across different sports. Their future returns will depend on the extent of financial support granted for the players’ career and the clubs’ operations. Team value will be uplifted as clubs will sell their rights to raise capital and sign players in future.
The other assets that can be tokenized include venture capital funds, stablecoins, and essential commodities.
The tokenization market is currently expanding and growing fast proving to be a high-reward opportunity for investors. Become an integral part of this emerging sector by indulging in tokenized platform development sooner than later. Choose the most experienced tokenization platform company and get a reliable service at cost-effective prices for multiplying your profits.