Imagine the possibility of having complete control over every single asset you own at your fingertips, digitally, without dubiety as to who, why, or which stakeholder may be able to amend, constrict, or infringe on their fiscal values.
Tokenization allows the user to have hands-on access to real estate, cars, money, gold, silver, bonds, or probably what you, as the reader, are most familiar with, art! Or most commonly referred to as NFTs in the current cycle of market knowledge.
What actually is the process of Tokenization? In its most simplistic form, tokenization is the process of converting a physical asset into a unique code on the Distributed Ledger (DLT). This undeniably indicates the holder of the code to also be the owner of the asset. Bitcoin is a form of tokenization where ‘tokens’, or in this case, Bitcoins – represent the quantity that a user holds which translate to a fiscal value on Cryptoasset exchanges.
Familiarisation with this technology early is key to ensuring you understand the current trends that Blockchain projects are beginning to undertake. Notably, LCX and their Tiamonds initiative have created an upstir in the market, allowing their users to hold physical diamonds digitally (https://tiamonds.com/).
Owning a token can be referred to as ‘having the complete means to prove ownership of something’. Tokens themselves do not hold any value, but act as a substitute to legal agreements, contracts, physical / digital items, essentially any object that may require you to provide proof-of-ownership, the purpose of tokenisation is to allow the true owner to prove their ownership within seconds.
The Future of Tokenization
Tokenization will allow businesses, and people to hold anything of value on secure decentralised systems. Mistrust, low security, and no integrity are unsolvable problems in our centralised banking systems. Tokenization solves this on every scale. Whilst no technology is perfect and free from security risks, decentralised but regulated systems such as ERC-20 achieve this to the most possible level currently. Human errors, malware, or phishing can still persist and it is up to the early adopters to create such an environment where data is as safe as possible.