In the rapidly evolving digital landscape, tokenization is emerging as a powerful tool for businesses to unlock new revenue streams.
The asset tokenization market is expected to reach $5.6 billion by the end of 2026 and major players like JP Morgan and BlackRock are already exploring tokenized financial assets. This makes it the perfect time for brands to strategize on how they can use tokenized assets for business growth.
But why exactly should brands participate in asset tokenization? This article delves into the benefits of tokenizing physical items, backed by relevant statistics and real-world examples, and explores how brands can leverage this innovative technology to their advantage.
Tokenization democratizes asset ownership, enabling brands to reach a global audience and potentially create new revenue streams.
By tokenizing assets, brands can increase customer engagement, enhance transparency, and position themselves well for the future.
Tokenization offers a low-cost entry point into the web3 space, allowing brands to leverage their existing assets and tap into the growing market for digital assets.
What are Tokenized Assets?
A tokenized asset is the digital representation of the rights associated with real-world assets or digital items on a distributed ledger. They provide complete or fractional ownership of the underlying asset to consumers, who can then trade them across marketplaces. Now, every time an owner trades a fractional or whole tokenized asset on a marketplace, the asset issuer can earn a pre-defined royalty.
Another reason tokenization is disrupting businesses is that the blockchain technology underlying it ensures transparency, efficiency, security, and traceability of ownership.
Traditional systems often involve multiple intermediaries, manual processes, and opaque record-keeping, making it difficult to track and verify ownership. With asset tokenization, every transaction is recorded on the blockchain, creating a decentralized and publicly accessible ledger. This transparency reduces the potential for fraud, enhances accountability, and builds trust among stakeholders.
Also, blockchain-based tokenization eliminates complex, time-consuming processes like paperwork and manual verification found in traditional systems. It streamlines operations, reduces costs, and decreases settlement times as smart contracts automate and enforce predefined rules.
Overall, these benefits help businesses reduce costs, improve trust, and unlock new possibilities for value creation.
5 Benefits of Asset Tokenization
Asset tokenization is a trillion-dollar opportunity according to popular financial institutions like JP Morgan, Blackrock, and Goldman Sachs. And if your business hasn’t already leveraged it, here are five good reasons to reconsider:
Improves Liquidity and Accessibility
Typically, it’s challenging to find buyers for illiquid assets like real estate or fine art quickly due to the high costs associated with them. However, when the St. Regis Aspen Resort in Colorado was tokenized and listed on a marketplace, it saw a 32% price increase per share on the first day. Since then, its trading volume and monetary value increased and its investor base expanded steadily from a dozen to 500, according to a case study from MarketSpace Capital.
The reason for the growth was simple — the asset had low capital requirements and increased investor access, thanks to tokenization. When an asset is split into smaller tokens, more people can invest in it. This leads to increased liquidity and improves the project’s accessibility, making it easy for the project to sell or raise capital quickly.
Increases Asset Worth
The value of traditional assets like paintings, fine wine, luxury watches, and jewelry is tied to their authenticity, rarity, and provenance.
Yet, despite having anti-counterfeit tests and tools like RFID tags, holograms, color-changing inks, etc., $600 billion in fake goods are traded every year. And the number of counterfeits has increased by 10,000% in two decades.
So, proving the authenticity of luxury goods is still a concern. That’s why many luxury brands like Luxe Watches have started tokenizing their assets and issuing NFT certificates as proof of ownership that can be passed on to future owners. Tokenization enhances the asset's value and increases buyer confidence as the blockchain provides a tamper-proof record of the asset's authenticity and ownership history.
Potentially Provides Ongoing Revenue
Rare assets and memorabilia tend to increase in value over time. For example, the baseball card, the T206 Honus Wagner, came with a pack of cigarettes in the early 1900s. It sold for $1,100 in the early 1970s but is now worth $6.6 million. While the seller made $6.6 million from the sale, Sweet Caporal Cigarettes, the company that made the Wagner card, suffered a loss as it gave the card away as a freebie. This is because a brand can’t profit from subsequent resales when it sells an asset the traditional way.
Tokenization changes this. It enables certain brands to earn a fee every time the asset is resold on the secondary market. This creates potential ongoing revenue without incurring additional expenses.
Lowers Entry Cost
There’s untapped value in the web3 and Metaverse — executives estimate that 4.2% of their revenues (~$1 trillion) will come from the Metaverse in the next three years. And the global web3 market is expected to reach $81.5 billion in 2030. That means businesses should start establishing a strong presence in the web3 space to stay ahead of the curve and gain a competitive advantage.
Tokenizing existing assets provides a low-cost entry point for brands and helps them enter the digital space without creating a digital collection from scratch. For example, if a brand sells sneakers, it can tokenize existing assets to create their digital twins and launch them in the Metaverse instead of designing a new collection.
Another important benefit of tokenization is that it allows brands to experiment with digital assets and the web3 space without risking their core business. If a tokenized asset doesn't perform as expected, the brand can learn from the experience and iterate on its strategy without significant financial loss.
Opens Up Global Markets
The global accessibility of tokenized assets eliminates geographical barriers and opens up new markets for both investors and collectors. It enables individuals from different regions to participate in ownership or investment opportunities that were previously inaccessible due to physical limitations.
For instance, a person in Asia can buy a fraction of a tokenized real estate property in Europe or a collector in South America can buy a tokenized piece of art from North America.
This expanded market potential fosters a more inclusive and liquid marketplace as a broader pool of potential buyers and investors can now engage in transactions regardless of their location.
Tokenize Assets Easily with Dibbs
Asset tokenization enables brands to tap into the burgeoning web3 space, engage with a global audience, and create additional value from their existing assets.
If you're a brand looking to explore the potential of tokenization, an asset tokenization platform like Dibbs can help. It takes care of everything in the asset tokenization process and provides a secure vault to store your assets. In addition, Dibbs provides a user-friendly dashboard that allows collectors to track their NFTs, access sales data, and gain insights into consumer interactions,
All in all, Dibbs creates a seamless experience for managing and monetizing their collectible-backed digital assets. To learn more about how Dibbs can help your business tokenize assets, schedule a demo today.
