6 Assets Your Company Should Prepare for Tokenization Right Now
You don’t need to have programming knowledge or a designated dev team in order to transition your company to Web3 and experience the benefits of Asset Tokenization.
According to the World Economic Forum, around 11% of businesses are already using blockchain technology in their operations, while 74% of tech-savvy executive teams say they believe there’s huge business potential in blockchain technology.
Just by tokenizing your company’s assets, you can streamline processes like royalties, invoices, and contracts, potentially achieving significant efficiency improvements and cost savings.
In the following text, we will explore some practical examples of Asset Tokenization, its benefits, and how you can implement it in your company.
But first, we need to briefly cover the concept of Asset Tokenization and its relation to Web3.
What is Real-World Asset (RWA) Tokenization?
Real-world asset tokenization is the process of converting ownership rights of a physical asset into a digital token on a blockchain.
This means that you can take valuable assets such as office buildings or artwork and create digital pieces representing them. The produced pieces can then be used to facilitate a variety of transactions while avoiding the hurdles of traditional systems.
The tokens can be bought, sold, or traded with ease, often on digital marketplaces.
These digital representations facilitate more efficient, secure, and transparent transactions, allowing for fractional ownership, broader investor access, and increased liquidity in markets that are traditionally less liquid.
It is an innovative approach that can enhance capital raising and investment opportunities for businesses and investors alike.
RWA Tokenization Trend
A recent report published by the Boston Consulting Group (BCG) predicts that the market for tokenized real-world assets (RWA) may reach a valuation of $16 trillion by 2030.
Graph 1: BCG Asset Tokenization Estimates
This would account for approximately 10% of the global economic output, signaling a significant shift towards the adoption of blockchain technology and tokenized assets.
Polymesh, a tokenization-specialized blockchain, reports that the digital assets market is currently valued at approximately 1 trillion dollars.
Additionally, there exists an untapped potential of roughly 800 trillion dollars in real assets that are yet to be tokenized.”
Now, let’s explore how businesses can leverage tokenization to their advantage.
- Intellectual Property
Intellectual property assets, including everything from art and music to patents and trademarks, can now be transformed into digital tokens on a blockchain network.
But what does this mean for IP holders, and why should your company explore this frontier?
The value of Intellectual Property can be immense, but realizing that value and converting it into liquid capital can be a complex and challenging process.
Web3 offers an opportunity to capture the value of IP into a tradeable form, potentially unlocking new funding avenues. It can also enhance the way IP is managed, secured, and commercialized.
Top Benefits of Tokenizing Intellectual Property
- New Financing Opportunities
Tokenization can make it easier to raise funds by offering investors a tangible stake in the IP’s future revenue streams without diluting equity or taking on debt.
- Global Reach
By leveraging blockchain, you can offer tokens representing your IP to a global audience, increasing the visibility and potential market for your intellectual property.
- Increased Liquidity of IP Assets
Traditionally, IP is a highly illiquid asset class. Tokenization can create a market for IP rights, providing holders with the ability to buy and sell these assets more freely.
- Democratization of Investment
Smaller investors can participate in the IP market through fractional ownership, promoting wider access to the value created by artists, inventors, and creators.
- Enhanced Security and Authenticity
Blockchain’s inherent characteristics can help in verifying the authenticity of the IP and tracking its ownership, reducing the risk of counterfeiting and unauthorized use.
For companies that generate value through creativity and innovation, tokenization could be the key to unlocking new growth and investment.
- Tokenized Real Estate
In an age where technology is continually pushing the boundaries of what’s possible, the real estate market could experience a significant transformation with the introduction of tokenization.
Given that real estate is traditionally not easily converted to cash, tokenization offers a modern solution by creating digital tokens on a blockchain. So, what advantages does a company gain by adopting this innovative method?
The tokenization of real estate is not merely a trendy innovation, but a strategic move toward liquidity, inclusivity, and diversification.
For property owners, it represents a novel method of capital raising without the need to sell the property or incur debt.
It makes real estate investment accessible to more people, as it breaks down the cost of entry into the market.
What Are the Advantages of Tokenizing Real Estate?
By tokenizing real estate assets, your company can tap into a range of unique competitive advantages:
- Increased Liquidity
transforms real estate into a more liquid form of investment. Digital tokens can be bought and sold like stocks, making it easier to convert real estate holdings into cash.
- Access to a Global Investor Base
Blockchain knows no borders. Tokenizing your real estate asset opens up the market to international investors, potentially increasing demand and value.
- Fractional Ownership
This concept allows for smaller investment minimums, democratizing access to real estate investments and expanding the potential investor pool.
- Improved Transaction Efficiency
Blockchain can reduce the need for intermediaries, lower transaction costs, and streamline the process of buying and selling real estate.
- Enhanced Transparency and Security
With blockchain’s immutable ledger, each transaction is recorded, time-stamped, and made accessible to all parties, ensuring transparency and reducing the potential for fraud.
- Potential for Asset Appreciation
As tokenized assets become more mainstream, the increased ease of trading and broader market access may lead to higher valuations of tokenized real estate.
Companies looking ahead should think about turning their real estate into digital tokens. It’s not just a smart move—it might be an essential way to stay on top in the fast-moving world of digital property investing.
- Fine Art
The intersection of art and blockchain technology is transforming how art is bought, sold, and enjoyed. Why are galleries, artists, and collectors turning towards this digital future?
Tokenization opens up the exclusive world of fine art to a much wider audience. It allows art collectors and enthusiasts to own a piece of history and culture without the need to purchase an entire artwork.
Moreover, it introduces a new level of liquidity to the art market, which has traditionally been characterized by its illiquidity and opaqueness.
Maecenas Fine Art is a prominent example of a company making strides in the tokenization of fine art. They offer a blockchain-based platform that enables users to purchase fractional ownership in works of art.
For instance, Maecenas successfully tokenized ‘14 Small Electric Chairs‘ by Andy Warhol, allowing investors to own a fraction of this iconic piece.
The platform democratizes access to fine art investment and ensures security and transparency through Web3 technology.
What Advantages Does Tokenization Bring to Fine Arts?
- Enhanced Liquidity
Fine art tokens can be bought and sold with ease, providing asset liquidity. This liquidity can potentially change the dynamics of the art investment market, making it more dynamic and accessible.
- Lowered Barriers to Entry
Tokenization enables fractional ownership, allowing individuals and companies with different budget levels to invest in high-value art pieces.
- Portfolio Diversification
For companies, fine art tokens represent a new asset class to diversify investment portfolios, potentially reducing risk and increasing stability.
- Democratization of Art Ownership
By offering fractional shares, tokenization can democratize art ownership, providing access to a market once reserved for the wealthy or well-connected.
- Increased Transparency
The use of blockchain ensures a transparent transaction history and proof of ownership, which is particularly valuable in an industry often shrouded in secrecy.
- Global Market Participation
Blockchain facilitates cross-border transactions, allowing global participation in art investment without geographical limitations.
- Web3 Invoices
Managing invoices can be a tedious and inefficient process, often mired by manual data entry, tracking, and reconciliation that consume valuable time and resources.
Tokenizing invoices can create an entirely new ecosystem for managing and financing trade receivables.
The transition to Web3 can enable businesses to unlock the cash tied up in their unpaid invoices instantly, providing them with the liquidity they need to grow.
Furthermore, tokenized invoices can be traded, offering investors a completely new asset class and businesses a novel way to manage their receivables.
How Can Tokenized Invoicing Benefit Your Company?
- Improved Liquidity
Tokenization can convert accounts receivable into immediate, liquid assets. This improved cash flow can be crucial for operational requirements, investment, or growth opportunities.
- Access to a Global Pool of Investors
Tokenized invoices can be sold to a global pool of investors, potentially at better rates than local financial institutions would offer.
- Reduction in Financing Costs
By cutting out intermediaries typically involved in invoice financing, tokenization can significantly reduce transaction and financing costs.
- Faster Transactions
The use of blockchain technology can expedite the traditionally slow process of invoice settlement, allowing for near-instant transactions.
- Risk Distribution
Investors purchasing tokenized invoices spread their risk across different assets, which can be attractive compared to traditional investment opportunities.
- Enhanced Security and Transparency
The immutable nature of blockchain technology ensures that once an invoice is tokenized, its authenticity can be verified, preventing fraud and providing transparency.
For businesses ready to move to Web3, tokenized invoices could be the key to unlocking a new era of financial agility and opportunities.
- Tokenized Royalties
Tokenizing allows for the fractional ownership of royalty-generating assets, such as music tracks, videos, images, and patents. The rationale behind tokenizing royalties is compelling.
It democratizes access to income-generating assets that were previously out of reach for average investors and provides creators with an alternative, potentially more lucrative channel for funding their work.
This method also promises enhanced liquidity, broader market access, and a transparent, secure ledger of transactions.
What Will Tokenizing Royalties Mean for Your Business?
- Diversification of Funding Sources
Tokenizing royalties can help your company avoid the pitfalls of traditional funding routes by offering a piece of its future revenue streams directly to investors.
- Expansion of Investor Base
The ability to sell fractionalized interests in royalties means that you can appeal to a wider range of investors, including those who may not traditionally invest in royalties.
- Immediate Access to Capital
Creators and companies can receive funding upfront by selling tokens tied to their royalties, rather than waiting for periodic royalty payments.
- Increased Liquidity of Royalty Assets
Tokens can be traded on secondary markets, providing liquidity to what is traditionally a non-liquid asset.
- Transparent Tracking of Revenue Flows
Blockchain technology can offer a clear, immutable record of ownership and distribution of royalties, ensuring fair compensation for creators and clarity for investors.
- Global Reach
Tokenization can give investors from around the world access to royalty-generating assets, potentially increasing the value of these assets through broader exposure.
For companies and creators, tokenization opens up a whole new landscape of possibilities for funding and investment.
It represents not just a financial innovation but also a cultural shift towards a more inclusive and equitable ecosystem for revenue sharing.
As this trend gains momentum, it could well redefine the traditional models of royalty distribution and investment.
- Carbon Credits
In the race against climate change, tokenizing carbon credits represents a strategic fusion of environmental responsibility with blockchain’s efficiency.
Tokenizing carbon credits allows businesses to materialize their commitment to sustainability in a way that’s transparent, traceable, and tradeable.
This move could harness the power of markets to drive environmental change, creating a more dynamic and immediate incentive for reducing emissions.
An example of a company leading the charge in this domain is Nori, a marketplace for carbon removal.
Nori facilitates the buying and selling of tokenized carbon credits, ensuring that each token represents a specific amount of carbon sequestered from the atmosphere.
Their platform simplifies the process of direct support for sustainability projects, connecting responsible companies with verifiable carbon offset opportunities.
What Benefits Can You Expect?
- Streamlined Trade of Carbon Credits
Tokenization enables the easy transfer and sale of carbon credits on a digital marketplace, streamlining what has traditionally been a complex and opaque process.
- Improved Market Access
Smaller companies, which might have been sidelined in traditional carbon markets due to scale, can participate on a level playing field in a tokenized system.
- Enhanced Transparency and Verification
The use of blockchain ensures that the carbon credits are not double-counted and that their environmental impact is recorded and traceable back to the source.
- Engagement with Conscious Consumers
By tokenizing carbon credits, companies can demonstrate their environmental commitment in a quantifiable way, potentially attracting consumers who prefer to do business with eco-friendly companies.
- Flexible Compliance with Regulations
As governments around the world tighten carbon emissions regulations, having a flexible and efficient way to purchase carbon offsets will become increasingly important for compliance.
The tokenization of carbon credits offers a compelling opportunity for businesses to align with global sustainability goals while engaging in an innovative financial market.
How to Transition Your Business?
Right now, there are many platforms emerging that aim to offer asset tokenization. Picking a platform with good features and credibility is vital.
A platform like eSync, for instance, provides an accessible entry point into tokenization, particularly for small and medium-sized businesses.
Image: eSync Website
It’s designed to simplify the process without requiring extensive blockchain knowledge, making it a suitable option for those new to the concept of Web3 and digital assets.
However, it’s important to conduct thorough research and consider your specific business needs when selecting a platform.
While eSync offers a user-friendly approach and a range of services beneficial for various asset types, each business should evaluate different platforms to find the one that best aligns with its tokenization objectives and overall strategy.
Remember, the goal is to find a balance between ease of use, security, and the ability to meet your company’s unique requirements in the evolving landscape of digital assets.
In conclusion, the transition to Web3 and the tokenization of assets such as intellectual property, real estate, fine art, invoices, royalties, and carbon credits presents a transformative opportunity for many businesses.
By embracing these innovative practices, companies can access new markets, increase liquidity, and enhance transparency and security. The future of business in the digital age lies in leveraging these technologies to unlock new avenues for growth, investment, and efficiency.
As the landscape evolves, it is imperative for businesses to stay informed and adapt to these changes, thereby positioning themselves at the forefront of this exciting era of digital transformation.