Why don’t investors put money into fine art? Because it requires a lot of money, knowledge, and time. Everything could change if you’re interested in the intersection of the art market and new digital tools; check out: How digital is changing the way we collect data – What is immersive art, and how does blockchain affect the art market?
What is the definition of art tokenization?
Tokenisation is breaking down an asset’s value into thousands of tiny pieces called tokens. A single token can easily be compared to a company’s stock. The value of an artwork can fluctuate depending on market conditions.
The answer is straightforward: NFTs. The company was able to fragment ownership of the artwork by converting the monolithic painting into thousands of digital tokens. This is similar to buying stock in a traditional company.
Following are Steps Involved in Tokenizing an Artwork:
The steps below will show you how to tokenize your assets or skills to fund development projects that increase the value of your help.
1. Choosing an Asset
The process of selecting an asset for tokenization is depicted in this diagram.
You can tokenize anything you own or can create, but it’s a good idea to pick something that has the potential to hold its value (which is why the current NFT market features so much “art”).
The most popular things that people tokenize are as follows:
Gold, diamonds, platinum, commemorative coins, large corporation share certificates, gems, and other valuables will only increase in value over time.
NFTs can be used to protect assets such as a luxury car, aircraft, yacht, or even your home. You can decide what percentage of the support the token will represent once again.
Artworks, music collections, graphic design, images of pets, sports collectibles, and antiques are among the most popular assets for tokenization.
Patents, trademarks, copyrights, carbon credits, and other intangible assets can also be tokenized.
If you’re going to use asset tokenization, make sure it’s something that will be relevant in the economy and technology in the next few years.
2. Selecting a Revenue Model
If you’re tokenizing your paintings, graphic designs, or any other visual art form, NFT marketplaces like OpenSea, Crypto.com, or Orica might be an excellent place to start. If someone buys these tokens, you will receive funds to fund any development projects.
You’ll be tokenizing your works or working hours if you’re a software programmer, app developer, or UI/UX, designer. You can offer your service to token holders in addition to purchasing tokens, which will increase the value of your tokens.
Matthew Vernon used the Ethereum blockchain to tokenize his product design skills in the form of BOI tokens. One BOI can be exchanged for a one-hour expert product design consultation with Matthew Vernon.
3. Economy of Tokens
Illustration of a tokenized asset increasing in value in terms of money.
The success of asset tokenization is influenced in part by token economics. If you continue to progress on the project you’re funding, NFTs issued for your paintings, UI/UX designs, graphics, memes, collectibles, or photographs will appreciate.
If suddenly more people start supporting your project and investing in your tokens, the value of the tokens will rise as well. As a result of the unexpected increase in demand for your tokens, the supply will be reduced, and the value will increase.
You can hold one-time token sales or gradually increase the number of tokens available. You’ll need to study the token economics of other tokenization projects like yours. Keep an eye on the value and transactions of equivalent tokens on NFT marketplaces like OpenSea or Binance.
4. Creating NFTs on Internet
An ERC20 token on the Ethereum blockchain is the most common form of NFT. You can create your tokens on a variety of online platforms. The most popular ones are ERC20 Token Generator, Guarda, and TokenMint.
It takes less than ten minutes to create an ERC20 NFT. You will, however, require a cryptocurrency wallet and some Ether (ETH) in your wallet.
You’ll have to fill out an online form with information about the NFTs, including their name, symbol, initial supply, token type, and blockchain network. The fees vary by platform, but you typically pay a commission fee, a gas fee, and so on.
5. Legal Requirements
The legality of money and investments is depicted.
If you’re tokenizing something you own solely for your use, you only need to follow these guidelines:
Laws governing monetary transactions on a local level.
While transacting online, paying any applicable taxes. The tokenization platforms usually handle taxation.
Local laws govern cryptocurrency transactions.
You’ll need to create solid legal documents in crowdfunding scenarios. If you’re transferring partial rights to patents, trademarks, or real estate, it’s critical.
6. Arrangements for Custodianship
If you want complete control over your NFT tokens, a custodian crypto wallet may not be the best option. Non-custodial wallets like MetaMask and Trust Wallet can be used to create crypto wallets.
However, using a custodian platform to manage your crypto wallet and tokens is always a good idea. If you forget your transaction passcode, the custodian can assist you in regaining access to your account.
In custodian arrangements, your private key is kept by third-party custodians like Binance or Guarda. They can also assist you with easier token issuance and trading through their platform.
7. Token Distribution
You must release or distribute the tokens for buyers to purchase at this point in the process. The best times to release NFTs are usually at events like the Initial Token Offering (ITO).
Technically processing tokens, running the ICO, and issuing current tokens are examples of such events. For an ICO, you’ll need the offering documents and marketing support tools in addition to the tokens.
8. Networking Expansion
A visual representation of token network expansion.
After completing all the steps above, you’re ready to start funding personal projects with NFT issuance or keep your tokens as collectibles.
You should focus on selling your tokens to raise money for development projects. Make sure that word of your asset tokenization reaches as many potential supporters and investors as possible.
Content marketing, newsletter/email marketing, online advertising, video marketing, referral programs, and press releases are all digital marketing tactics that can help you reach a large audience.
You can also actively publicize the news on social media platforms to reach a broader audience.
The Advantages of Art Tokenization
Because blockchain is an immutable and transparent technology, its benefits and features are automatically applied to the tokens held on the platform. Art tokenization aids in the eradication of several problems that plague the industry.
To begin with, tokenization converts ownership into tradable tokens, increasing the liquidity of artworks. As a result, art has become a lucrative investment option. Investing in art attracts investors.
On the other hand, a tokenizing art platform can also be used to authenticate and verify the works of art. Thanks to blockchain technology, it is now easier to track an item’s certification and owners.
Finally, rather than using the services of expensive galleries, independent and budding artists can use this medium to list and promote their work. This allows them to own their jobs without paying third-party intermediaries or agents.
What Does the Future Have in Store?
Bloomberg estimates that the global art industry was worth $63.7 billion in 2018. Given the bullish market trends, experts predict that this sector will grow exponentially in the coming years. Blockchain and art tokenization will play a significant role in this renaissance, given the numerous benefits.
This has already begun to bear fruit, with billionaire John McAfee tweeting in support of art tokenization and revealing plans to digitize an untitled piece by Pablo Picasso in the latter part of 2018. Furthermore, with the industry’s bright prospects, entrepreneurs can use art tokenization to launch new platforms, assisting in expanding and implementing this revolutionary medium with the help of the NFT marketplace development services provider.