What is asset tokenization?
Asset tokenization refers to the process of creating digital tokens that represent ownership of a real-life asset, commonly known as NFTs. The token creation process uses blockchain technology, allowing you to store and trade the tokens freely and securely as you would with other crypto currencies and blockchain-based assets.
After you generate a non-fungible token of an asset, you can list it on an NFT exchange (if you want to sell its ownership). It is possible to instantly tokenize assets with a well-understood market value, such as artwork or digital trading cards. However, tokenizing real estate or works of art requires assessment and auditing by a bank, accountant or law firm.
The following steps will help you understand how to tokenize your personal assets or skills to fund development projects that add value to your assets.
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Select the Asset
You can tokenize anything you own or create, but it’s worth choosing something that can hold its value (that’s why the current NFT market offers so much ‘art’).
The following are the most popular things that individuals tokenize:
Gold, diamond, platinum, commemorative coins, corporate stock certificates, precious stones, etc., the value of which will only increase over time.
You can create NFTs for assets such as a luxury car, airplane, yacht, or even your home. Again, you have the option to decide what percentage of the asset the token will represent.
The most popular assets for tokenization are artwork, music collections, graphic design, pet images, sports collectibles, and antiques.
You can also tokenize intangible assets such as patents, trademarks, copyrights, carbon credits, etc.
When choosing asset tokenization, choose something that will remain relevant to the economy and technology of the coming years.
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Identify the revenue model
If you tokenize your paintings, graphics, or other forms of visuals, you may want to list them on NFT marketplaces such as Open Sea, Crypto.com, or Orica. When someone buys these tokens, you get money to fund development projects.
If you are a software programmer, app developer or UI/UX designer then you will tokenize your works or your working hours. In addition to token purchases, you can also offer your service to token holders that further increase the value of your tokens.
Matthew Vernon tokenized his product design skills in the form of BOI tokens into an Ethereum blockchain. You can trade one BOI for a one-hour expert product design service from Matthew Vernon.
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Token economy
Token economics partly determines the success of asset tokenization. NFTs spent on your paintings, UI/UX designs, graphics, memes, collectibles, or photographs will increase in value as you continue to make progress on the project you are funding.
The value of the tokens will also increase if suddenly more people start supporting your project and investing in your tokens. This unexpected increase in the demand for your tokens will minimize the supply, thus increasing the value.
You can opt for one-time token sales or gradually increase the number of tokens. You should follow the token economy of other similar tokenization projects. Keep an eye on the NFT marketplaces like open Sea or Binance to track the value and trades of equivalent tokens.
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Online NFT’s maken
The most popular form of NFT is an ERC20 token on the Ethereum blockchain. There are many online platforms that you can use to store your tokens. ERC20 Token Generator, Guarda and Token Mint are the most trending.
Making an ERC20 NFT is easy and takes less than 10 minutes. However, you must have a crypto currency wallet and some Ether (ETH) in your wallet.
You must complete an online form regarding the NFT details such as name, symbol, initial delivery, token type and the blockchain network. Fees vary with the platform and generally you pay commission, gas fees, and so on.
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Legal Regulations
If you tokenize something that you only own for yourself, all you have to do is adhere to the following:
Local Money Transaction Laws.
Pay the necessary taxes during online transactions. Most of the time, the tokenization platforms will charge you.
Local Laws Regarding Crypto currency Transactions.
In crowdfunding scenarios, you need to create solid legal documents. It is critical if you are transferring partial rights to patents, trademarks or real estate.
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Custodian Arrangements
If you want to have full control over your NFT tokens, then you may not want to go through a custodian crypto wallet. You can create crypto wallets with Meta Mask or Trust Wallet, which are non-custodian wallets.
However, it is always a good idea to manage your crypto wallet and tokens through a custodial platform. If you lose the transaction access code, the custodian can assist you in retrieving your account.
In custody agreements, your private key remains with third-party custodians such as Binance or Guarda. They also help you make it easier to issue and trade tokens from their platform.
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Distribution of Tokens
At this point in the process, you need to release or distribute the tokens for the buyers to buy. Usually, events like Initial Token Offering (ITO) are the best opportunities to release the NFTs.
Such events include the technical processing of tokens, the execution of the ICO and the issuance of the current tokens. Apart from the tokens, you need the offer documents and marketing support tools for ICO.
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Expand the network
Since you have successfully completed all the steps above, you are ready to fund personal projects through NFT issuance or hold your tokens as collectibles.
If you are willing to raise money for development projects, you should focus on marketing your tokens. Make sure your asset tokenization news reaches the maximum number of potential project backers and investors.
You can attract a huge audience by using a variety of digital marketing tactics, such as content marketing, newsletter/email marketing, online advertising, video marketing, referral programs, and press releases.