Investing in Non-bankable Assets Part III- Tokenizing Non-bankable Assets

by | Nov 17, 2020 | Industry | 0 comments

In the first article of this series, we defined what non-bankable assets are and went a step further to explain why this asset class is a unique opportunity for wealth management. In the second part, we discussed how foreign exchange (FX), derivatives, and commodity markets work. We also discussed the hidden dangers of leveraged investments and why you should not stick to more traditional asset classes.

Now, this article focuses on the value proposition for investors of tokenizing non-bankable assets on the blockchain. We will use artwork and real estate assets as examples to illustrate our points. 

Art Work as a Non-bankable Asset

Art collections are a common type of illiquid asset, and their sale on the market is generally 100% (though there are instances of mutual ownership collections). Linking a piece of art with securities or tokens (issuing tokens at 0.01% of the artwork value) makes it possible to minimize the investment ticket at will.   

Besides, the small ticket size is a sine qua non condition for introducing a liquid market for collectors and investors, which does not call for the sale of the whole asset. The various solutions that can be accessed by market participants are:

  • A module-based closed-end fund can be embraced, where the piece of art would be sold in the future, and token holders would be rewarded for their contributions.  
  • Likewise, the tokens could be traded freely in a market where all owners with 51% could call other holders at an established premium over the market value. 

The tokenization period of the art can be stored in a museum or a collection center and exhibited to viewers. The point to note in the above discussion is that the artwork’s exploitation privileges and commitments can be represented and transferred independently from its ownership by a so-called smart contract token or, generally speaking, an experience token representing custody, usage, or exploitation of the asset.    

Consider these applications for solving issues. Each of them exhibits an asset experience, which can be monetized and exchanged separately from the beneficial ownership. 

Earnings from the sale of display tickets can (for example, through smart contracts) be merged with ownership tokens to create cash flows. Museums and collection centers can also monetize partially or totally the tokens they want to eliminate from circulation for the artwork they do not take as part of their permanent collection. 

Museums could also permit the use of tokens to enable the display of works from their long term collection at another location on a mutual basis while retaining the majority ownership.  

This strategy can be used in other non-bankable assets such as real estate, luxury cars, yachts, wines, and spirits. For example, for a real estate, a luxury property can be owned by thousands of investors who can utilize blockchain tokens to redistribute rental income or the allocation of time for the personal use of the property. 

Tokenizer Blockchain Banking Platform

The Tokenizer is a blockchain investment banking system that champions accessible, transparent, and safe financial services. We believe that everyone deserves equal access to investment and fundraising opportunities. That is why we are democratizing access to capital for investors and fundraisers by making investing and fundraising efficient, safe, and accessible to everyone.

Are you in need of raising funds or investing in security tokens? Apply to raise funds through Tokenizer by filling this application form. If you want to invest in security tokens, sign up for a Tokenizer Investment Account today, and if you want to liquidate and trade-in Asset-Backed Tokens, we have a decentralized exchange designed for you! You can also contact us to order a metallic crypto card at $149 only.

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