When it comes to asset tokenization, there are a lot of assets that can be transformed into tokens, such as real estate, commodities, collectibles, art, funds, shares, and so on.
If you are new to this, there might be some questions that are circling in your mind. In particular, you might wonder if your assets can be tokenized on the blockchain. Before proceeding, it is important to understand the basics of tokenization first.
What is Asset Tokenization on the Blockchain?
Asset tokenization is a process in which the project owner creates digital tokens on the blockchain. These tokens will represent digital or physical assets. The blockchain guarantees that once you purchase the tokens of the asset, there will be no parties who can alter the information of the ownership. For example, the owners of the assets will have total control of the underlying assets.
In a nutshell, the tokenization process can effectively transform the way we exchange information and values.
The tokens allow information and value to be stored, transferred, and verified in a secure way. Since the process is automatic, there is no need to wait for hours or days to transfer the ownership of the particular assets to your possession. These crypto tokens can come in many different forms.
The developers will program them according to the needs and preferences of the project owners. There are different types of tokens, such as security tokens, utility tokens, cryptocurrencies, and many more.
Let’s see how the tokenization life cycle works.
Asset Tokenization Process
So, how to tokenize an asset? Each tokenization company might have different procedures for tokenizing particular assets. But commonly, these are the steps to take to tokenize the assets.
Pick the asset
The very first step is to determine the particular asset that is tokenized. It is crucial to pick an asset that already has a promising market. It will be easier for the token owners to evaluate the token value.
It is best to let the accounting firm help you evaluate the value of the asset.
Of course, you could work with your tokenization company to help you out.
Business Model
The second step is to determine the business model. Obviously, one will take this step after determining the value of the asset. After all, you will want to be clear on how these assets can make money for you.
To attain the business requirements, you will need to specify your main objectives and goals. You must consider how the tokenized platform will generate and deliver values for you.
Make a good plan for the key operations. Determine the sources of the revenue, the consumer base, and so on.
Economics strategy
The next step is to determine the strategy of the token economy. That includes the determination of the number of available tokens that will be distributed to the users, developers, creators, and investors.
Too high of a supply can expose a problem with demand and your token value. But it does not mean you have to set your token supply to a low number. When it is too low, it will have low liquidity. That’s why market research is very important in this phase. You can also determine the numbers of the tokens based on the values given by your accounting firm.
The Technological Requirements
It is also important to actualize the idea of tokenization in the technical overview.
The project owners will have several choices to choose from. You could either write the platform code by yourself or outsource it to a tokenization company.
You don’t have to conduct this alone. There are experts who are ready to help you out with attaining the solution for your asset tokenization. Contact INC4 for further information.
The regulations
The regulation step is one of the most complex phases in the asset tokenization life cycle. It is because the new network of the blockchain will not be able to function outside of the law’s reach. Not to mention, the cross-border regulations will make it more complicated. In this phase, it is important for the project owners to consult the matter with the legal advisor.
There are a lot of factors which you can easily miss in this step. So, it is much better to leave the matter to the professionals.
If you hire a quality team of coders like INC4, they will have an expert who can recommend you to a legal advisor. Or, if you are in the same location as the service provider, they might have the expert on board as well.
Creating the white paper
The next step is to build the white paper. It is important to write and publish the white paper in the right way so that it can reach your targeted audiences and users. Your target audiences won’t likely know about your project advantages and solutions if you don’t explain them to them.
Here is where the white paper comes in to help. The whitepaper is the bridge between your project and your users and investors.
Early adopters have special privileges
You will need to test the platform or solution before deploying it into the public domain. In this case, your early consumers will have the privilege of testing the new platform. Therefore, it is important to offer these wonderful features to them. It is also the time to test the water first. A complete set of the features will be coded after the tests. Not to mention, the feedback from the early access users can alter the process of tokenization.
Pitching to investors
The next step is to pitch the solution to the potential investors. In this phase, the market target is obviously crystal clear so that it will convince the investors to send their money to your project.
The product is being constructed
With the investment made for your project, you are ready to take on the final version of your tokenized asset.
Keep in mind all of the feedback you get from the MVP users and investors.
Soon, the final token will be ready for production.
Scalability
After the token economics, you will reach the point where you think you need to scale up your tokenized assets. Make sure you maintain a relationship with your software development company like INC4 to help you with your expansion.
