What Everyone Should Know About Tokenization

What Everyone Should Know About Tokenization

Blockchain tokenization is a means of digital representation of a right and can be done with the help of a ledger. This can be a right to asset ownership and any other type of tradable rights.

The tokens, like digital representations of rights are easily transferable among individuals. It’s as simple as sending a BTC payment. This lets anybody buy, sell, and trade the ownership of almost anything without the need of going through any market hosts or the initial issuers of tokens. As a result, the market friction is significantly reduced.

The token contracts have already been used to tokenize real estate, pieces of art, cars, stocks, and other. Tokenization is gaining increasing popularity as a means of bringing sports stars and other celebrities closer to their fans. At the same time, it's potentially opening up new areas for making investments and entertainment.

Are there any famous examples of tokenization?

One of the most well-known cases of a tokenized sports contract happened this year. Spencer Dinwiddie, a professional basketball player, tokenized some part of his $34M contract with the Brooklyn Nets, creating a specific tokenized investment opportunity. This was finalized on a Dream Fan Shares platform.

Dinwiddie divided a portion of his Brooklyn Nets contract into 90 separate Investment Tokens. Owing to this, Dinwiddie can get $13.5M of his three-year contract worth $34.4M. The investors themselves get a tokenized bond that pays out 4.95% APR.

With an interest rate of 4.95%, Dinwiddie’s three-year bond pays out way more than most financial mechanisms and definitely more than most government or corporate bonds. This way, investors get the potential to generate returns, and Dinwiddie can get money from his contract much faster than if used any other way.

Dinwiddie is the first famous person that used the Dream Fan Shares platform. Still, he won't be the last one. A similar token is going to be launched for both popular artists and influencers, and then for even a wider amount of celebrities.

The possibility to bring people and their favorite sports stars together through tokenized investing models goes far beyond ordinary, securing a favorable interest rate for investors. Later on, this may be an opportunity to support a tokenized sponsorship for a celebrity and then share in their success.

What are other possible ways of using tokenization?

In the sports industry, tokenization is still in its earliest stage of development. Nevertheless, various platforms offering tokenization have started to develop, and now they can offer more exciting usage cases.

Moreover, Socios, a platform that has recently been launched, is also considered one of the most prominent examples. Sports fans are able to purchase a specific cryptocurrency type there called Fan tokens. This provides voting rights to shareholders and as a result, allows them to help with decision-making regarding their favorite sports teams. Holders can also earn profit through various incentives: VIP experiences, meetings with players, guided tours, etc.

Socios helps sports fans feel like a real part of the club. At the same time, they don’t benefit financially from the success of the team. Due to this, the fan tokes at Socios aren't considered security ones. Therefore, you don’t need to be an authorized investor to participate.

TokenStars is another platform and it offers a totally different approach to celebrities and tokenization. TokenStars calls itself “The first blockchain celebrity management platform”, and that’s precisely what it is. Celebrities there can host their own initial coin offering, and that allows them to divide their time into tokenized blocks. They can be acquired for activities, such as after-parties with fans, Skype streams, individual workouts, and others.

The system is so flexible it can be adapted to almost any use option. Through this system, it's also possible to tokenize the performance of a sports star or an artist, for example. Also, users can sponsor their favorite players and teams at important events, and get a bit of the earnings if a star or team of their choice performs well.

What is the future of tokenization?

So why has tokenization become that popular recently? One of the reasons is its ability to increase the core value of the rights via increased liquidity and utility. You can trade tokenized rights on the market having less friction. In return, this can increase the rights' liquidity. These rights can integrate across various systems, which allows unlimited integration and increased utility of rights.

This helps form the brand new asset types that weren't practical or possible to create, and allow brands to become way more decentralized entities.

It's not very hard to foresee the future of tokenization. Anything or anyone having the potential to receive value after a fixed period has the opportunity for tokenization and being sold via web services. Celebrities, online influencers, sports stars, brands, enterprises, patents — anything that has an attributed value can be subject to tokenization.

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