Tokenization for Assets and Products: Features, Costs, and Use Cases

Before tokenization itself, let’s start by going over what exactly is a “token.” In case you didn’t know, the word and the concept existed long before Bitcoin and cryptocurrencies, so it’s not always crypto-related. A token is a visible or tangible representation of something else, and that’s it. A casino/gaming token, a voucher token, a token of our appreciation, and so on.

In the crypto world, we can say that a token is a digital object, a string of code that works to represent some kind of value —money, real-world things, artworks, etc. In this vein, tokenization could be defined as the act of transforming an asset or its ownership rights into distinct units known as tokens inside a crypto network.

Or, in other words, is the process that lets us digitize in a ledger any kind of asset, tangible or not.

Tokenization is employed to enhance liquidity, facilitate fractional ownership, and streamline the trading of all kinds of assets, making them more accessible to a wider range of investors.

Tokens could be digital representations of real estate, art, or financial instruments, allowing for more efficient and decentralized transactions on different crypto networks, worldwide, and without bureaucratic limitations.

Types of Tokenization

Tokenization in crypto ledgers could be classified as fungible, non-fungible, governance, and utility. Fungible tokenization involves standard tokens with identical values, akin to interchangeable currency units —dollar for dollar, euro for euro, GBYTE for GBYTE, etc.

On the other hand, non-fungible tokenization represents ownership of unique assets, like digital art or real estate, where the token's value is determined by the underlying asset.

This kind of tokenization is especially useful for fractional ownership: for instance, numerous investors worldwide owning the same house through fungible tokens.

Governance tokenization empowers holders with voting rights, enabling participation in decision-making processes within a digital platform. Utility tokenization, meanwhile, grants access to specific products and services on a particular chain, facilitating actions such as paying transaction fees or operating decentralized market systems.

In a broader sense, we can categorize tokenization as tangible and intangible, considering the assets involved. So, these assets can be tangible, including gold or real estate, or intangible, encompassing voting rights or content licensing.

Essentially, tokenization extends to virtually anything considered valuable, ownable, and incorporable into a broader asset market.

Why Tokenize Your Product(s)?

Tokenizing products on a cryptocurrency network offers a multifaceted array of benefits for individuals and businesses alike. Let’s check some of them ahead.

• Enhanced Liquidity and Accessibility: The conversion of physical or digital assets into tokens facilitates easy tradability on crypto platforms, promoting fractional ownership and broadening access to a diverse range of investors.

• Transparent and Secure Ownership Tracking: The decentralized and immutable nature of distributed ledgers ensures a secure and transparent recording of ownership history, reducing the risk of fraud and fostering trust among stakeholders.

  
  

• Innovative Business Models: Tokenization could introduce novel business models, with utility tokens acting as access keys to specific products or services, streamlining transactions, eliminating intermediaries, and creating decentralized marketplaces.

• Community Engagement and Governance: Governance tokens empower stakeholders to actively participate in decision-making processes, fostering a sense of community and shared responsibility. Besides, participation could bring rewards to the users.

• Faster, Cheaper Transactions: Leveraging crypto tokens allows for bypassing traditional intermediaries, reducing transaction costs and processing times, resulting in a more streamlined and cost-efficient method of transferring value.

• Global Accessibility: Crypto tokens, existing on digital ledgers, can be traded and sold 24/7 worldwide, eliminating time zone constraints and enhancing accessibility, ensuring a dynamic and responsive marketplace in the global economy.

  
  

In essence, tokenizing products transforms traditional business practices, offering a more inclusive, transparent, and efficient framework for asset exchanges in any part of the world, at any given moment.

Potential Use Cases

Tokenization presents a myriad of potential use cases across various industries. In real estate, for instance, it can revolutionize property ownership by breaking down large assets into tradable tokens, allowing for easier investment and fractional ownership.

Art and collectibles can be tokenized, enabling broader participation in the art market and facilitating the trading of shares in valuable pieces. This democratization of traditionally exclusive markets is a key driver for tokenization.

Supply chain management stands to benefit from the transparency and traceability offered by ledger-based tokens. Tokenizing goods throughout the supply chain can enhance visibility, reduce fraud, and ensure the authenticity of products.

Similarly, in the healthcare sector, patient data can be securely tokenized, preserving privacy while still allowing for secure and efficient data sharing among authorized parties.

Tokenization is also making waves in the financial industry, where traditional assets like stocks and bonds can be represented as tokens, enabling faster and more cost-effective transactions.

Furthermore, loyalty programs and reward systems in various sectors can be streamlined by issuing tokens, providing a unified and transferable form of value for consumers.

More Cases for Tokenization

On the other hand, fiat currencies and commodities like gold and precious metals could be turned (tokenized) into stablecoins.

Stablecoins pegged to the value of these assets offer a more secure and efficient means of digital representation, introducing stability and mitigating the volatility often associated with cryptocurrencies.

Notable examples include Tether (USDT), backed by US Dollar reserves, and PAX Gold (PAXG), representing one troy ounce of gold.

Furthermore, the application of tokenization extends to entry tickets, certifications, and digital twins. In the events industry, tokenizing entry tickets not only reduces costs but also opens avenues for secondary markets, enabling ticket trading and reselling.

Certifications can be securely stored and managed on a distributed ledger through tokenization, creating tamper-proof records of individuals' credentials.

This innovative approach streamlines the verification process, providing a more efficient and secure method for individuals and organizations to manage sensitive information.

Besides, the tokenization of digital twins, representing digital versions of physical assets, offers businesses new opportunities to manage and trade these assets in the crypto ecosystem. This would create new revenue streams and reduce associated management costs.

Tokenization Potential Costs

As we’ve seen, tokenization has a lot of benefits, but they don’t come without certain costs. We’d say that the more assets to tokenize and the more complex or regulated the access to them, the more expensive the costs would be.

For instance, preparing an internal loyalty program isn’t the same as trying to tokenize regulated securities or fiat currencies.

Regulatory compliance, which could be a primary expense, involves navigating complex legal frameworks, with costs ranging from $5,000 to $50,000. The technology infrastructure for distributed ledgers, costing between $10,000 and $100,000, is another crucial investment.

Token development and issuance, asset valuation and due diligence, marketing, and ongoing compliance contribute to the overall expenses, with each category incurring varying costs [Investax].

Besides, if you hire some middlemen to do the job, they could charge you between $5,000 and $10,000 only for the issuance, or even take a high monthly fee for maintenance. Tokenization could save a lot of costs and open new business opportunities, but without programming knowledge, it could be really expensive. That’s something solvable, though.

Tokenization in Obyte

Obyte offers the possibility to create custom tokens without coding, and with coding too, for experts. In any case, creating tokens on this platform is a user-friendly and inexpensive process, and these tokens can represent a variety of assets or entities.

In contrast to Ethereum, tokens on Obyte are treated equally, with their transfer seamlessly handled by the core system and following the same rules as the native currency, GBYTE. Transaction fees are often below $1 in this asset.

The fact that Obyte tokens enjoy the same status as the native currency eliminates the need to repeatedly implement basic transfer functions for each token, ensuring consistent and error-free operations, as well as uniform user experience.

Token supply can be either fixed or unlimited, and other interesting properties are available for advanced users.

When defining a new token type, its parameters can be customized to suit its intended environment. For compliance in regulated settings, features like “cosigned_by_definer” may be employed, requiring each token transaction to be cosigned by the issuer, such as a financial institution.

Additionally, for enhanced regulation in specific environments, the “spender_attested” property can be utilized to limit token ownership and transferability exclusively to attested users with verified identities.

In privacy-focused scenarios, the “is_private” property can be activated, ensuring that all token transfers remain private, occurring directly between sender and recipient without appearing on the public ledger (DAG).

For loyalty points, operators can restrict token transfers by setting the “is_transferrable” property to false, preventing trading on secondary markets and allowing redemption only with the issuer.

Moreover, the system supports more intricate conditions for token issuance and transfer based on specific criteria.

Tokens Without Coding

Tokenization is also available for non-coders through the easy-to-use Asset Registry. This is a simple website where you can create any kind of Obyte-based customized token, including loyalty points, ICO shares, or any other tokenized product. You just fill in the spaces (supply, name, description, etc.) and order the creation by paying barely 0.005 GBYTEs (less than $1).

Then, your new coin is ready on-chain to be promoted and used. No extra steps or fees.

Aufort, a European investment company, is already using tokenization features in Obyte. This brand uses the DAG to represent its gold reserves internally, and that implies interesting features for its customers.

They can send, receive, sell, or withdraw their gold investments anytime, almost instantly and without fees, globally –even if they don’t see the “tokenization,” due to Aufort being a custodial brand.

So, we can say that Obyte stands out in the realm of tokenization to be fast, efficient, and inexpensive.

Its comprehensive and adaptable approach to tokenization, catering to both novice and expert users, positions it as a noteworthy player in the evolving landscape of digital asset representation and exchange.

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