Why Companies got to Get on the Tokenization Train

by Admin
4 minutes
Why Companies got to Get on the Tokenization Train

The following article is that the second during a series. Read part one here.

One of the foremost compelling uses of blockchain technology is that the ability to reliably record information and verify when and where it had been added to the network.

This feature, combined with the power to synchronize a ledger, means all parties can get an equivalent information at an equivalent time and believe within the truthfulness of that information. The result has been a rush to treat blockchains like infallible digital notaries, recording truthful information and sharing it around. Useful, definitely, but with significant limitations.

While knowing when and where a product was made is interesting and having the ability to trace its history may be a powerful means to scale back fraud, it isn’t an economic unit that I can purchase or sell.

Digital tokens, on the opposite , are designed for economic activity. And blockchains are ideal for handling them.

Rx for commerce

Take something complex and valuable sort of a package of drugs . Not only do i want to record when and the way it had been created and where, i might also wish to sell this product to my distribution partners then on to pharmacies.

By creating a digital token to represent that package of drugs , not only can we record all the history of that medicine, a bit like a digital notary solution, we will also buy and sell that item by moving the token between accounts.

Public blockchains like ethereum are largely supported the power to handle both complex business logic with smart contracts and an almost unlimited number and sort of digital tokens. Some tokens (like those representing money) are essentially fungible while others are unique. In either case, we believe the longer term of commerce is in contracts that involve the exchange of product and repair tokens for money tokens.

Quite simply, the economy goes to be tokenized.

Using digital tokens, we will recreate all the sophistication of the prevailing financial and operational business world we sleep in , but with far less operational cost and complexity, and roll in the hay all within an equivalent system. the longer term of business contracting is, we believe, the exchange of product and repair tokens for digital payment tokens.

When combining tokenization with the complex business logic enabled by smart contracts, we will represent complex business interactions faithfully, and that we can do such a lot more reliably than most companies can today. It’s not atypical for companies to seek out that their ability to barter agreements far exceeds their ability to truly keep to those agreements.

Bird’s-eye view

Volume purchasing agreements are an honest example: most companies beyond a particular size often have multiple enterprise resource planning (ERP) systems and subcontractors and subsidiaries, which makes doing even simple things like keeping track of volume purchased across the network difficult. And if you can’t track volume, you can’t get the discount.

With a sensible contract and a blockchain for procurement, it’s possible to both track total volume consumed across the business network and always calculate the right price for every order and validate each invoice.

As the behavior therapy matures and corporations put more and more assets, products, and services into public blockchains, expect the delivery of complex financial services to be digitized also .

Everything from trade finance to receivables factoring are going to be a one-click activity, once participants have established a trustworthy diary of doing business on the blockchain – a record of granularity and precision which will far exceed the reliability of any traditional credit report.

To get there from here, however, the primary step is for companies to embrace tokenization and move faraway from simply treating blockchains like fancy digital notaries.