Token Economics and Tokenization: How it can affect your business.
We all know crypto is a big deal, but what exactly is crypto tokenization?
Crypto tokenization is the process of turning real-world assets into cryptocurrency tokens. For example, if you wanted to convert your car into a crypto token, you could do that with crypto tokenization.
How does this work?
First you have to find an asset that can be digitized. (Don’t worry—practically any asset can be digitized.) Then you have to turn that asset into a digital file—this is called tokenization. Then you use blockchain technology to represent the physical asset with a digital one. That’s it! Pretty simple, right?
As the cryptocurrency and blockchain space continues to grow, we’re seeing more and more businesses become tokenized.
A token is a digital unit of exchange that can be used to buy or sell goods and services. As with any currency, a token is a representation of value, which can then be exchanged for capital. While cryptocurrencies such as Bitcoin (BTC) are “currency tokens,” other tokens are used in different ways. There are several types of tokens, including utility tokens and security tokens.
Utility tokens give holders access to a product or service, while security tokens represent an investment contract in an underlying asset, such as stocks or bonds. In 2018, security token offerings were valued at $1 billion—this is a huge increase from the previous year’s $100 million valuation. With these numbers increasing exponentially yearly, it’s clear that this market has room for tremendous growth.
More businesses are adopting tokenization as an alternative method of fundraising and business models. Blockchain technology enables the exchange of value without intermediaries or centralized entities—which means lower transaction costs for all parties involved. Tokenization is also an excellent way for businesses to interact directly with their customers by providing them with a digital asset that can be used to access the company’s products or services through the blockchain network.
Tokenization and token economy are easily explained in a short term, although it is hard to develop a long-term perspective for them, as it is impossible to forecast the amount and average turnover rate of typified tokens.