Recently, an approximation has been done that the current value of all real-world assets is around $256 trillion around the world. The number of these real estates must be huge, but it keeps on changing. Proprietorship of the majority of real estate is still on paper. Because of this, the transaction process takes a longer time. Asset trades are also tortured with huge amounts of red-tapism, large amounts of fees, and geographical restrictions. Assets like gold, real estate, fine arts are hard to subdivide which makes their own respective markets highly illiquid.
A revolution called Tokenization of Real estate assets came to the world’s light. In the tokenization process, the real world assets get marked by digital tokens already available on the blockchain network. When the tokenization process is completed, tokens become digital stocks with undeniable proof of ownership. Tokenization is a new way of managing the asset, an upgrade from the paper system.
NECESSITY OF TOKENIZING REAL WORLD ASSETS:
An ecosystem is created of unparalleled liquidity that facilitates safe and quick transactions, irrespective of tokenization of a real-world asset or intangible assets. No third-party intervention is required in trading by representing real-world assets with digital tokens on blockchains.
Benefits from the Tokenization of real-world assets;
- Enhanced liquidity of assets
- No third-party intervention
- Lesser barriers to entry
- Fractional ownership possibility attracts new investors
- High market transparency lowers market risks
- Difficult and long drawn trades get done significantly faster
- Transactions are cheaper as administrative expenses are replaced with self authorizing smart contracts
Real estate tokenization is a game-changer for the abundant market. Tokenization deals with the eventual change in the series of enhancements in the market. It is an open playground for investors without the intervention of the third-party, due to which transactions become easier and quicker.
Tokenization of assets in a few simple steps:
- Asset selection:
One first needs to find an asset that is worth tokenizing and has an approachable market. Evaluation of the token value of the asset becomes an easy task. If you are not able to do so, get in touch with an auditor or accounting firm, where the evaluation of the token can be done.
Research about the competitors is also included in this step. If you have the idea, then you need to evaluate the market and look for competitors. Somebody’s loss is somebody’s gain, if your competitor is not performing in the market, then it is a golden chance for you to attract new and existing customers.
- Business requirements:
If the asset is found worth tokenizing, then you need to find out the business model you want to go with. A clear idea needs to be visioned about platform creation and delivering value. Design a plan for everything, right from revenue generation, customer base, details of finances, etc.
- Token economics:
Strategize your token economics. It should be decided beforehand how many tokens will be in existence and how they will be distributed to the network users, investors, developers, and creators. Too much supply of tokens can deteriorate its value for the investors and customers. If the supply of tokens is low, the liquidity would be low and the purpose of tokenization will not be fulfilled.
- Technical requirements:
Transform your ideas into reality with the help of technical experts. Two options are going to be available for doing this. First, to code the platform yourself and another is to look for an outsourcing facility. One can also look for an online open-source smart contract and try the new solution.
- Legal regulations:
This is quite a complex task because the complete tokenization process and functionalities will be performed under the legal framework. The best way to do this is to get in touch with a legal team and resolve every other matter even before starting.
- White paper:
The white paper is a piece of paper that tells its potential customers, why the platform was created, and why the tokenization process is being done. The benefits of the platform are shared with potential customers. Everything is mentioned in the white paper with technical specifications.
- MVP development:
Even though the platform development process is done with immense knowledge and specifications, there are changes that indicate that it might lack something. Therefore MVP is done to check if the extensive coding that is being done is a perfect fit for the users.
If you have completed feedback from the MPV, then you will know the market position to land. This will help in attracting investors.
- Product built:
With the investors on board, one is ready to work. People should always take into account all the feedback that has been received by the investors and the MVP users. They can be like one from future customers.
- Network expansion:
If all the prevision steps are completed smoothly, then it is time to expand the existing network. You need a team who will work on content marketing, PR, social media, video graphics, etc. Even the best player on the ground needs an amazing marketing team. So, marketing should be given more emphasis to settle and expand in the industry.
These four benefits of tokenization, enhanced liquidity, increased transparency, fractional ownership, and reduced cost, all work together to provide more access to the investors globally. Tokenization of real-world assets is a big first step if we’re going to reduce inequality and provide an opportunity for more people all around the world.