Learn about investing, trading, retirement, banking, personal finance and more.
Tokenization is a concept that can take several forms, but essentially it means to create a tradeable item which holds value anchored in an asset which is not itself readily tradeable.
If something of value is not easily traded, it is natural that a token is created which represents part or all of such value, which can then be held until redemption or circulated as currency. Historically, some things, such as hours of labor, could not easily be accounted for without a physical token.
One benefit is that tokens make things easier to account for. Tokenization has many real-world examples but has become used almost exclusively in reference to digital tokens. In today’s world, of course, it matters less and less whether physical assets exist anywhere at all: people only care about the numbers. Cryptocurrencies are taking that notion to a new level by creating value in currencies which are made up of little more than numbers and other symbols on a blockchain of computers. Tokens are being created out of thin air to serve as micro-currencies for specific distributed applications on the blockchain of the Ethereum platform and other protocols which allow for distributed applications and smart contracts. Many of the services which are using distributed applications and are creating tokens for their services can do so by simply inviting people to buy some of the coins and thereby give them a tradeable value based on what people use them for. Or, they can attempt to allow the tokens to derive their value from the utility they provide, and the fact that nothing else would translate the value as efficiently.
If a unique service was to make all the hours worked by people in a city, according to a blockchain in the municipal computer system, into tokens which were traded based on their relationship to energy consumption or some other variable of interest, the labor hours in the city would be “tokenized” on a platform whose purpose was so closely tied to the token that the two would not be as strong without each other. This is just a loose, imaginary example of what tokenization might mean in one context. Increasingly, tokenization is used in reference to the internet-of-things and the economy of microtransactions that seems to be on the horizon, if blockchains can indeed keep their transaction fees so small that the economy will be reshaped by the ability of consumers to pay tiny amounts through smart contracts and so forth for various things in their day-to-day lives.
Another, different kind of tokenization being kicked around lately would be individuals selling-off small slices of interest in assets they own, such as their home, which would be said to be “tokenized.” Small businesses in the real world might be able to tokenize their business and their assets soon. Many people living in geographic proximity to one another could tokenize and jointly own cars, bikes, buses, etc. In coding lingo, tokenization is the act of splitting a message into the parts that comprise it. How interesting that the code for creating tokens could be itself made up of tokens. The future holds many surprises for us, to be sure.
Explore the costs and benefits of financial planning services. Understand the difference between fee-only, fee-based, and commission-based advisors. Learn how to make an informed decision based on your financial needs, knowledge, and the value these services provide
Explore the world of commercial paper, a high-quality, unsecured short-term debt instrument used by corporations. Understand its benefits like flexibility, liquidity, and low costs, and also learn about the associated risks. Ideal for investors and businesses alike
Dive into the world of subprime loans, their characteristics, and risks. Learn how these high-interest loans for low-credit individuals played a role in the 2007-2008 financial crisis and how the subprime lending landscape is evolving. Be informed about your borrowing options.
Discover how FHA loans provide lower down payments and interest rates, opening doors to homeownership for lower-income earners. Learn about eligibility, benefits, and find FHA lenders near you.
Explore the possibility of receiving your salary in Bitcoin. Understand the IRS's stance on crypto-compensation, the role of financial services in facilitating Bitcoin paychecks, and the tax implications. Also, learn about the risks and benefits of margin trading
Learn about the significance of pivot points in technical analysis and their application in trading strategies. Unlock the potential of pivot points with Tickeron's insightful guidance.
Explore the legality of Bitcoin across the globe. Understand the varying regulations, tax implications, and the impact of Bitcoin on traditional legal and financial systems. Stay informed about the legalities of Bitcoin in your country
Unlock the potential of price action trading, a dynamic strategy capturing the attention of traders worldwide. Delve into the tools, benefits, and constraints, and discover why this approach is gaining prominence across a wide spectrum of asset classes, from equities and bonds to forex and...
Explore the most profitable times to trade in the forex markets by understanding market overlaps and strategic scheduling. Discover why forex markets operate 24/7, how different global markets influence currency values, and why liquidity matters. Get insights on the impact of news releases and...
Healthcare stocks: Discover the best health sector stocks for 2023 with our comprehensive financial analysis. Dive into UnitedHealth, Abbott Labs, McKesson, and more for strategic investment insights. Explore market caps, growth prospects, and the impact of healthcare trends on these leading