If you have been dabbling in blockchains and Bitcoins of late, it’s time to move ahead. You may have already heard about the term, ‘token’. They have transformed the way transactions take place. They are a new and innovative way to invest. Let us unearth all the details about tokenization.
You can secure very sensitive data with the help of tokens. These are nothing but unrelated values of the same length and format. In the world of blockchain, these tokens exist in a non-sensitive form. Well! To be precise, the concept has been there for some time now. However, with the advent of blockchain and cryptocurrencies, it has taken a whole new form.
So, what exactly are tokens? They mainly represent sensitive assets or data points. You can look at the concept of tokens in a more physical form. They represent the ease of use, as in the case of chips in casino games. You can take this example. If you happen to have at least $500 worth of tokens, you can probably get them exchanged at the network, where you hold them, but not outside. You can even store your card information in the form of tokens. Tokenization helps with quick transfers.
This is one of the ways you can guard sensitive information. Now, this is only one facet of it. If you happen to combine it with blockchain technology, tokenization opens several pathways to change how businesses operate. You should be aware of one of the most popular tokens in the blockchain network. It is called Bitcoin. You can track the token on the network where it is being circulated.
Can You Make Copies of Tokens?
While it is extremely easy to create duplicate files on computer networks, you cannot duplicate tokens. Blockchain technology provides this powerful ecosystem, which safeguards against this threat. Once you log the transactions in the ledger and confirm them, they are displayed to all participants of the network. They become immutable. The proof-of-work algorithm behind the ledger renders any duplication effort meaningless. Some tokens are rare. So, you will find investors scrambling and ready to pay a good price, to own such tokens.
You should also learn about the various benefits, that tokenization brings with itself. One of them is Asset Tokenization. Amongst several other benefits, you will also find fractional ownership to be a lucrative concept today. Let us find out in more detail.
Asset Tokenization Decoded
Take the example of owning a house on a blockchain as a paperless affair. You can convert the asset into a token. The process of sale or transfer can get easy with the tokenization of the asset. You do not need to go to a lawyer or a public notary to get the documents assessed or verified either. You can easily facilitate the transaction process without an intermediary. Moreover, when the transaction takes place, the entire process will be displayed publicly.
This brings us to the different kinds of tokenization possibilities. They are non-fungible and fungible tokens, that you should know of.
Non-Fungible tokens are unique tokens which you cannot interchange. Take the example of a piece of artwork. You cannot make duplicates of the same.
Next, comes the Fungible token, which is an item, that you can interchange with another one. Gold, silver, and all metals are fungible tokens.
So, by now, you have understood the immense benefits of tokens. One of the main benefits as already stated before is fractional ownership. This opens a wide range of investment options today. You can even tokenize a piece of real estate. It also helps you to increase your liquidity. No one can ever dispute the transaction that takes place through tokenization.