What is tokenization

21st martie 2020

Tokenization is the connection of your company to blockchain technology and the issuance of your own company tokens, which have a similar principle as shares.

Thanks to the connection to the blockchain, you can gradually automate all processes in your business. At the same time, you have up-to-date data on your costs, to which you can react quickly and thus save significantly. Once you automate your entire business and are connected to the blockchain, your company will be transparent and well-arranged for potential investors who like to buy your tokens.

Tokenization is the process of protecting sensitive data by replacing an algorithmically generated number called a token. Tokenization is often used to prevent credit card fraud. These tokens can transmit over the Internet or various wireless networks needed to process payments without exposing actual bank details. The actual number of bank accounts is stored in secure custody.

Tokenization is a method that converts rights to an asset into a digital token.
Suppose there is a house for 200,000 EUR. Tokenization can turn this apartment into 200,000 tokens (the number is completely arbitrary, so it can be 2 million tokens). Thus, each token represents 0.0005% of the underlying asset. Finally, we will issue a token on a platform that supports smart contracts, such as Ethereum, so that tokens can be freely purchased and sold on various exchanges.

When you buy one token, you are actually buying 0.0005% of the ownership asset. You buy 100,000 tokens and own 50% of your assets. You buy all 200,000 tokens and you are a 100% owner of the asset. Obviously, you are not becoming the legal owner of the property. However, because Blockchain is a public book that is immutable, it ensures that once you purchase tokens, no one can "erase" your property, even if it is not registered in the land registry. It should be clear why Blockchain allows this type of service.

Tokenization of other assets works in a similar way. If there is a Picasso image worth EUR 50 million, it can also be tokenized. The same applies to gold and diamonds and other movable and immovable values.