This is a new trend in Blockchain. Did you know?
Blockchain Tokenization is a new paradigm in Businesses
What is Blockchain Token?
Did you know the IDC predicts that by 2025, the tokenization asset market will reach USD 500 billion?
Blockchain Tokens are digital portrayals of anything which has a higher value and complete ownership. They are majorly used in payments and settlements between parties. The token displays the representation of multi-party ownership of an unseparated asset. It allows new opportunities and optimizes the business processes.
The ability to use the tokens across the grid allows businesses to improve processes and introduce new business models. An association of industry leaders InterWork Alliance (IWA) and the government are working towards developing some standards. They have also initiated a taxonomy known as the Token Taxonomy Framework (TTF). This taxonomy is known as the token formula that provides a common language that communicates the token’s properties.
TTF allows the creation of standardized tokens that are technology and platform-neutral, allowing the tokens to be used across blockchain networks.
What tokens can be used in businesses?
Unlike traditional methods, a token-based platform allows transferring value and ownership in the same transaction. Besides, any intangible asset can be tokenized and be made accessible for trading in a marketplace.
The physical assets can also be tokenized as settlements of other assets. These asset-backed tokens, known as stable coins, eliminate the mediator and optimize the business processes.
The collateral asset can be validated by external utilities to increase the token credibility. There are a lot of gold and fiat currency-backed tokens in the market, that hold a lot of importance.
Technology Used in Blockchain Tokens
The tokens are implemented using token contracts. The token contract allows the validation of business rules and transfers the value from one user’s wallet to another. The account-based models are used extensively for smart contracts. In such a model, the database is used to maintain the current asset state or token at any given period.
The platforms based on the UTXO model do not have a good database that will have the current balance as a single record. They maintain the balanced output of each transaction. The current token balance can be calculated by calculating all the unspent balances.
Tokenization presents many opportunities to increase business operational efficiency in an enterprise blockchain-based solution. It also helps in optimizing business processes and allows businesses to enter new platforms with several partners.
The use of standard-based tokens provides clarification and is universally accepted.