Explore what the tokenization of everything could mean for your business and brand
The blockchain is everywhere. While the explosive growth of the NFT market cap revealed many of the ways it can add real value to digital assets, the possibilities for tokenizing physical assets are only beginning to be charted.
The fusion of plainly demonstrated, real-world value with the security and flexibility of the blockchain is leading many brands to wonder what assets can be tokenized, and what kind of an impact it can have on their business. This article will lay out some of the possibilities given our current tech and legislative climate (spoiler: they’re big) as well as some examples of where tokenized assets are headed next. But first, let’s answer that central question.
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What Assets Can Be Tokenized?
The simple answer to the question of what assets can be tokenized is just about anything that you can possess and transfer ownership of. As we mentioned before, many of the best-known uses for NFTs up to this point have been for the trade of purely digital assets, whether they be avatars, discrete art pieces, or metaverse experiences. But the steady tokenization of everything applies to physical assets as well.
The built-in security and verification features of tokenization can just as easily be used to securely transfer ownership of real-life items. With the asset (or a legal representative like a contract or deed) securely stored by a third party, the corresponding token can be used for speedy trades.
If you’re still wondering just what tokenization is exactly, let’s take a step back. According to Gartner’s definition, tokenization is the process of replacing sensitive information such as credit card or social security numbers with non-sensitive surrogates — tokens — that refer back to the secured location where that information is stored. Non-fungible tokens, or NFTs, refer to any kind of tokens that represent unique goods (hence their non-fungibility) and can be transferred on blockchain networks. You could tokenize a picture of an unusual ape, a valuable trading card, or even a high-end fashion piece.
What Are the Benefits of Tokenization?
But why would you want to tokenize assets, particularly physical ones? It’s true that it will be a new process for many people, businesses, and brands, especially compared to the millennia worth of history behind fully physical transactions. Similar to the practice of using legal tender in transactions rather than directly exchanging goods, tokenizing assets is a faster, more flexible, and more secure way of doing business. Here’s why:
- Speed: The blockchain technology behind tokenization makes the most of modern computing and cryptography. Transactions that may take weeks or months to administer through traditional means instead take only seconds.
- Security: Tokenized transactions are secured at each stage thanks to their self-contained, impartial accounting on the blockchain ledger. When combined with secured facilities for storing corresponding physical assets or their legal representation, they present a safer means of doing business.
- Flexibility: Nearly anything can be tokenized and traded. The only limitation for matters such as the tokenization of securities is legislation, though recent moves from state and local governments are encouraging. You can even employ fractionalization to split tokens into multiple constituent pieces, allowing people to own and trade parts of valuable assets that would otherwise be out of their financial reach.
- Global Distribution: Moving prized assets across borders is an expensive and risky proposition: transportation, customs, security, and more quickly eat into any trade’s bottom line. But thanks to global NFT marketplaces, tokenized assets face no such difficulty, all while their physical counterparts remain safe and sound in secure facilities.
If you’d like to put tokenization of physical assets to work for your business, working with an established presence in the field can be a massive boon. As a company that originally started as a successful real-time 24-7 fractional collectible market., Dibbs proudly possesses both effective infrastructure and an invaluable knowledge base for businesses seeking to tokenize their assets. Contact us for more information on partnership opportunities today, or sign up to receive more content like this using the form below.
What Are Some Notable Examples of Tokenized Assets?
Numerous enterprising brands and individuals have already started using tokenization to bridge the gap between digital efficiency and physical assets. Here are some examples for inspiration as you consider how to bring your own assets to the blockchain.
Many NFTs consist of digital art, but this painting with some admittedly ignominious origins is an example of a truly physical NFT. “F.or Y.our R.eal E.ntertainment” hung in the NYC offices of Fyre Inc — yes, the same Fyre that ran the Fyre Festival of FEMA tent and terrible sandwich infamy — and was held by Ja Rule after the business flamed out. The painting now contains a custom-programmed NFC chip that can be used to authenticate its token counterpart.
Several fashion labels have used NFTs to empower a new breed of high-end membership programs. For example, the entire second floor of Warren Lotas’ Los Angeles store served as a high-end hang-out space for holders of its Wild Bunch NFTs on opening day, followed by exclusive access to certain real-world garments and other benefits. While these assets can be quickly and easily traded thanks to their blockchain basis, they carry plenty of physical-world benefits for their owners.
We’re also pleased to include our own marketplace built on fractional trading of prized collectibles on this list. Dibbs users can stake their claim on tokenized assets such as a 1986 Fleer #53 Magic Johnson PSA 10, a 2002 Pokemon Neo Destiny Shining Mewtwo 1st Edition PSA 10, and more thanks to the affordable and accessible nature of fractionalized trades. We keep each collectible in a secure vault facility, and holders of complete tokens can surrender them to retrieve the physical asset.
TechCrunch founder Michael Arrington applied the blockchain to physical spaces in an eye-catching way when he sold his Kyiv apartment as an NFT in 2021. The holder of the NFT, which opened for bidding at $20,000, received the ownership paperwork for the apartment, as well as ownership of a unique digital piece of art by a local artist (also as an NFT, naturally). Legally speaking, this was achieved by holding the title to the apartment in a trust, then stipulating that the property only be transferable as an NFT as part of its terms.
The MyPower platform tokenizes solar photovoltaic assets, letting consumers invest in renewable energy sources while reaping the rewards of partial ownership. Creator Riddle&Code says this approach allows for the development of all-new business models and markets, including the emergence of local and micro energy communities.
The Dibbs marketplace allowed us to build, test, and scale a flexible and practical implementation of blockchain technology for real-world business opportunities. If you’d like to use that same technology and infrastructural know-how to start creating value for your business’ assets, reach out today.