{"id":638,"date":"2021-10-19T12:55:29","date_gmt":"2021-10-19T12:55:29","guid":{"rendered":"https:\/\/www.blockedge.io\/blog\/?p=638"},"modified":"2022-01-20T14:27:31","modified_gmt":"2022-01-20T14:27:31","slug":"why-blockchain-tokenization-is-beneficial-for-enterprises","status":"publish","type":"post","link":"https:\/\/www.blockedge.io\/blog\/why-blockchain-tokenization-is-beneficial-for-enterprises\/","title":{"rendered":"Why Tokenization on the Blockchain Makes Perfect Sense for Enterprises?"},"content":{"rendered":"
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Home<\/a> \u00bb Why Tokenization on the Blockchain Makes Perfect Sense for Enterprises?\r\n<\/span><\/div><\/div>\r\n\r\n\r\n
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In general terms, a token denotes a particular asset or utility. But, do you think tokenization started with blockchain? Well, the concept of tokenization has been used since the 1970s by the financial industry to protect their clients\u2019 confidential information. Let\u2019s look into some real-life examples. If you have bought or sold shares on the stock market, you have used the concept of tokenization. If you\u2019ve used Apple Pay or Google Pay and paid using NFC (Near Field Communication), you have used tokens for security in this process.<\/p>\r\n

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For the stock market example, let\u2019s assume that the company is valued at $1 Million and opens with an IPO of 100,000 shares. Each share is now worth $10. If you own one such share, you own 0.001% of the company. Here, the \u201cvalue of the company\u201d is broken into parts (or tokens), and you can conveniently buy a stake in the company.<\/p>\r\n

The image below explains the concept of tokenization in mobile payments.<\/p>\r\n\r\n\r\n

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Source: YouTube Video by Brendan Owens<\/figcaption><\/figure>\r\n\r\n

In this process, the merchant got paid without ever seeing your personal financial information.<\/p>\r\n

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These were two of the most familiar common user examples of asset tokenization.<\/p>\r\n

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Asset tokenization on the blockchain<\/b><\/h2>\r\n
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An issuer tokenizes an asset when they want to divide its ownership and sell it in parts. Buyers don\u2019t need a lot of capital because they buy the asset ownership in segments rather than the whole asset.<\/p>\r\n

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As we have seen through examples, tokenization also plays a part in ramping up the security of the asset.\u00a0Because records on a tokenized blockchain are immutable, any transaction of these tokens stays secure. No one can change a buyer\u2019s record of ownership unless the buyer sells his token forward.<\/p>\r\n

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Before understanding the benefits of tokenization on the blockchain, first, we need to understand different asset types that we can tokenize on the blockchain.<\/p>\r\n

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What types of assets can you tokenize with blockchain data tokenization?<\/b><\/h2>\r\n
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Blockchain technology<\/a> can help tokenize all sorts of assets from real-estate properties, bonds, and commodities to racehorses, sports teams, and artwork.\u00a0<\/p>\r\n

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To simplify them, let\u2019s group these asset types into 4 categories:<\/p>\r\n

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1. Personal or Business Assets<\/b> <\/p>\r\n

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Anything that you or your business owns that you can sell for cash is an asset worth tokenization.<\/p>\r\n

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2. Equity<\/b><\/p>\r\n

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In the opening example, shares were the tokens representing the equity in a company. If blockchain stores these tokens, they will stay in a digital wallet.<\/p>\r\n

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3. Investment Funds<\/b> <\/p>\r\n

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Like a company\u2019s equity, the investment in funds is also up for digital tokenization on the blockchain.<\/p>\r\n

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4. Services <\/b><\/p>\r\n

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Companies can tokenize their services and sell them to interested buyers in exchange for cryptocurrency tokens like Bitcoin or Ethereum. These tokens will be non-exclusive.<\/p>\r\n

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Benefits of asset tokenization for blockchain users<\/b><\/h2>\r\n
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