How a Tokenization Service Can Bring Your IP to the Digital Sphere

An unsolved Rubik's Cube mid turn against a black background.

Tokenization services give IPs instant access to global, high-volume digital markets.

The internet has changed the way that consumers interact with their favorite brands and IP, with social media giving them a direct line to interact with the companies they love the most. However, a new era of the internet is rapidly approaching, and with it, new opportunities for organizations to connect with their fans. The big innovation? Tokenization - the secure digitization of physical goods that allows for a new type of asset ownership.

To be successful in the space, organizations will need to find a tokenization service to bring their IP to the digital sphere. But what is a tokenization service, and how do they help organizations penetrate the global digital market?

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What Is a Tokenization Service?

What Role Does Tokenized IP Play in the Digital Sphere?

What Are the Benefits of Tokenizing an IP?

What to Consider When Finding Tokenization Partners

Storage

Marketplaces

Security

What Is a Tokenization Service?

Existing at the crossroads of intellectual property and NFTs, a tokenization service creates an NFT backed by physical goods such as memorabilia, art, or a collection of products. The NFT token for an item represents ownership of both the physical item and its digital counterpart, which can then be bought and sold on a digital marketplace. The tokenization service will often keep the physical item stored in a safe place, like a vault. When ownership of the tokenized NFT is transferred to a new buyer, they gain the option to have the physical item shipped to them.

What Role Does Tokenized IP Play in the Digital Sphere?

The possibilities of NFTs are still being explored, but there are early indicators that show how intellectual property and NFTs will intertwine in the metaverse. One thing is clear: Tokenized IP can help your organization connect with a broad new market of enthusiastic customers. But keeping customers enthusiastic can be a challenge without offering some sort of X-factor. Therefore, organizations should consider the applications of your NFT beyond just being a digital collectible.

To reach their full monetization potential, NFTs should provide perks in both the physical and digital worlds. Organizations should consider the digital utility perks that come with owning one of their tokenized assets, such as granting access to a special event, being among the first to shop upcoming NFT collections, or getting to hear a snippet of a band’s next song.

Adding utility to an NFT helps organizations build a community around their tokenized assets, and that’s crucial to penetrating the digital sphere. Remember: The bigger a community is, the more the NFTs within that community will be traded, and frequent trading carries financial benefits.

What Are the Benefits of Tokenizing an IP?

There are several long-term and immediate benefits organizations will unlock when they tokenize their IP. First and foremost, tokenized assets enter a global, 24/7 market. Plus, most assets that an organization tokenizes will be highly liquid. Liquidity is important to a tokenized asset’s long-term success, as each sale in a secondary market will earn the creator a royalty payment, also called creator fees.

Because of how tokenization’s royalty payments work, it’s advantageous to tokenize a wide range of products. Think about collections of items fans of an IP would be willing to trade regularly, like an exclusive set of commemorative pins or limited edition trading cards. The items should elicit an emotional response from the buyer that makes them feel extra significant.

More significant one-to-one items can also be tokenized — for example, a movie prop that may traditionally go to auction — though they’re a bit more nuanced. Like other IP, these high-ticket items are stored safely in a vault, which lowers the risks of the asset being damaged during shipping and protects against other adverse effects such as poor environmental conditions. However, collectors may be less inclined to trade the tokenized asset due to its significance.

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What to Consider When Finding Tokenization Partners

Navigating the finer points of intellectual property and NFTs is complex, so it’s paramount for organizations to find the right partner. Tokenization services have become fairly common in the last few years, but the saturation hasn’t necessarily made it easier to find a good fit. With that in mind, here are a few things to consider when looking for a partner.

Storage

Asset-backed NFTs need to be stored somewhere. Organizations should ensure that their partner has secure storage locations capable of meeting the needs of specific assets. For instance, a collection of vintage books may need to be kept in a climate-controlled environment so they aren’t damaged over time. Storage facilities should also offer robust insurance; incidents like natural disasters are improbable but not impossible, so be sure your partner offers ample protection.

Marketplaces

A tokenization service should have a platform capable of listing and facilitating transactions for your assets. This marketplace should be available globally and 24/7 to facilitate as much sales volume as possible. Bonus points if the marketplace is able to facilitate secondary market trades, as this makes it easier to receive royalty payments.

Security

Partnering with a secure site will minimize the risk of a hack inadvertently affecting an organization or its fans. Unfortunately, NFT sites have been the target of hacks in the past, and as they gain importance, there are likely to be more attempts to breach websites. The Crypto.com hack is perhaps the most notorious, resulting in a $30 million loss for the company. Partner platforms should have airtight security protocols to mitigate the odds of a breach happening. In addition to maintaining the security of your physical items, your partner should monitor transactions to mitigate assets falling into the wrong hands. Ideally, security is handled holistically and encompasses every potential threat vector, be that bad actors or bad luck.

Dibbs checks all of these boxes and many more, offering robust tokenization services and a guiding hand to help organizations along the way. With a deep history in the NFT space and secure storage locations guaranteed to keep your assets in prime condition, Dibbs makes the tokenization process as frictionless as possible. If you’re interested in learning more about Dibbs as a partner, connect with us today!