What is tokenization?
Before we explain what tokenization is, let’s first define what it means to develop a token, Dnipro. We can briefly define it as the bearer of digital value. A title deed recorded on the blockchain that cannot be copied or falsified. It can be passed on to other people, but only with the consent of its owner. It can represent everything that our imagination can imagine. Examples of tokens include cryptocurrencies or NFTs, but this is just one of the ways this technology can be used. You can take the risk of claiming that a token is all that can be traded on the blockchain.
Thus, the tokenization of assets, Lviv means the process of digitizing assets, giving a certain value from the real world to their digital counterpart. By digitizing assets, we assign tokens to a specific object, business or person.
What is tokenization for?
In short, convenience and speed of circulation. The transfer of title to real estate requires a title deed and requires significant costs beyond the waiting time. If we keep the ownership in the form of a token, the sale transaction will take seconds, it will be executed securely and the result will be irreversible. Our law will be stored on a blockchain that cannot be faked. The blockchain plays the role of a trusted institution here, guaranteeing the truthfulness, transparency, durability and immutability of transactions.
Times are especially favorable for tokenization. It’s safe to say that trading assets will never be the same again. Tokenization of digital assets – Odessa, has made a new revolution in the investment industry, and the possibilities of what we can do with real assets are almost endless.
Both entrepreneurs and investors can gain greater autonomy as they find new ways to raise capital they never knew before, and only time will tell which industries will emerge in this innovation space.
What can be tokenized?
In theory – everything. Every asset, be it a work of art or a bottle of whiskey, as well as an intangible algorithm. Actually, currently the following assets are most often tokenized:
- The property. Thanks to tokenization, we can, for example, without leaving the country, purchase an apartment in the Maldives and profit from renting it out.
- Enterprises. Buying tokens from, for example, an energy producer will give us capital gains or free supplies of electricity.
- Works of art. For example, in 2018 Andy Warhol’s work “14 Small Electric Chairs” was tokenized and sold.
- Collecting. Bottles of fine wine or whiskey, including optimal storage.
- Securities. The aforementioned tokenization of shares, but also, for example, bonds or share certificates.
- Valuable metals. We can purchase tokens that represent a specific bar with a serial number that can be exchanged for physical metal.
- Personal tokens give buyers a share of the income or activities of the person (eg influencer) who issued the token.
A separate category will be digital resources, works that previously had no physical form. They are tokens, that is, bearers of value, although they never existed in physical form.
What does the process of tokenization of assets give us – Kharkov, Kiev?
There are indeed many opportunities offered by tokenization. The most important ones are:
- tokenization greatly simplifies the process of changing ownership rights, it does not require, for example, making changes to entries in the land and mortgage registers in the case of real estate,
- allows you to purchase some of the things that are difficult to divide, for example, 1/20 of a share in a hotel, thanks to this you can invest much smaller amounts,
- allows you not to worry about physical protection or storage of things, we can always have our own tokens in the wallet, unlike, for example, Rubens’ paintings,
- creates liquidity of illiquid assets, for example, real estate,
- allows to add value to immeasurable benefits (popularity of influencers),
- gives tax incentives (you can barter tokens),
- allows you to view the history of a product or check its authenticity,
- most often this allows you to maintain the anonymity of both the seller and the buyer.
How to tokenize?
The above catalog is not closed, because those interested in this topic will easily find other features of tokens that are useful in their activities.
The safest thing to do would be to hire a specialized company in Ukraine for asset tokenization – iTizzi Custom Software Development Company. The process may vary depending on the subject matter and the procedure adopted, but in general it will be as follows.
- Choosing our representative – that is, a company that will help you in this process.
- Initial analysis – an assessment of your needs, incl. in terms of financing, market requirements, etc.
- The choice of a tokenization model – whether it will be ICO, STO, or maybe ETO, which differ in the rights of the buyer.
- Identification of tokenomics – determination of the number of tokens or issue currency and the method of their distribution.
- Legal issues – compliance with KYC / AML rules, writing Whitepaper, etc.
- Maintenance – creation of tokens, creation of a specialized website.
- Sale of tokens – combined with their transfer to buyers.
- Monitoring – maintaining communication channels with customers and solving their problems.
Tokenization and crowdfunding in Ukraine
Both of these methods are used to receive money from investors in exchange for a promise to provide future profits, services, or goods. However, tokenization in this race has several advantages.
- Tokens can be traded on the exchange.
- The cost of tokenization can be lower than that of traditional fundraising, since we do not need to create a joint stock company.
- Smart contracts make it easy to automate various processes, such as the payment of dividends.
- The digital form of the token simplifies marketing, we can convert tokens, for example, by scanning a QR code.
Cons of tokenization
Like any method of work, tokenization also has its drawbacks. Problems that can arise while using it include:
The honesty of the seller. He may post pictures of his gold bars or his vineyard on the Internet, but this is not conclusive evidence that he actually has them. An audit in a specialized company is recommended.
Lack of knowledge. Buying tokens does not exempt us from assessing business risks. The reality may not be what we expect, even if the seller is honest.
Damage to the subject of the transaction. For example, if a hotel with tokens burns down, will we receive compensation? How much and when?
Legal problems. Our rights as shareholders are similar in most countries around the world. However, tokenization is a young area, and the assumption that we will easily exchange our tokens for packages of Colombian coffee may be overly optimistic.
Real life tokenization
The market is constantly evolving, so we note a few more interesting cases of tokenization:
Nike has unveiled a special series of shoes that it sells. The token allows you to check the number of pairs that match a given pattern and also allows you to log user data and shoe attributes.
Ernest & Young started alcohol tokenization in 2019. TATTO Wine users can purchase ERC-721 digital tokens, which represent a unique bottle of wine and give an idea of the history of production and the origin of the drink.
It also tokenized a luxury residential building in Manhattan located at 436 and 442 E, 13th Street in the East Village. Real estate worth over US $ 30 million has been realized on the Ethereum blockchain.
It seems that the tokenization of assets, Vinnitsa, Kiev, Odessa is in fact an innovation that will significantly change the rules governing the market. It can facilitate or even replace the use of exchanges, registries, or intermediary services such as notaries. This makes it quick and cheap to trade in property rights, and also allows you to sell shares in properties that are difficult to share, such as a hotel or artwork. Thanks to this, for example, real estate tokenization will give a chance to those who cannot afford to invest a significant amount of money.
Like any new way of working, tokenization comes with certain risks, and those who know them and develop tokenization first will win.
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