Asset tokenization offers multiple benefits:
The cost to tokenize an asset generally falls between $25,000 to $110,000. This range accounts for the complexity of the asset, legal requirements, the blockchain platform chosen, and other specifics of the tokenization process. Within this range, expenses can include legal consultation, technical development, compliance checks, marketing, and listing fees on exchanges. However, prices can fluctuate based on various factors, and it's recommended to get a tailored quote from a specialized service provider.
Smart contracts are self-executing contracts with the terms of agreement directly written into code. In asset tokenization, smart contracts automate and ensure the enforcement of specific terms and conditions. They manage the issuance, trade, and, sometimes, the redemption of tokens. Smart contracts also ensure that all transactions are compliant with predefined rules, making the process trustless and reducing the need for intermediaries.
Asset tokenization can be used for fundraising by allowing entities to sell fractional ownership of their assets in the form of tokens. For instance, a startup might tokenize a portion of its equity or a real estate developer might tokenize parts of a property project. Investors purchase these tokens, providing upfront capital to the entity. As the project or company prospers, the token's value can increase, offering potential returns to investors. This method can be an alternative to traditional fundraising methods, granting quicker access to global capital.