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How Tokens Are Changing The Fintech World

“Tokenization” is a word that we are frequently hearing these days. Especially since blockchain technology broadened the use case of whats possible. With bitcoin the token became mainstream. But is it something related only to the fintech sector? We will take a look at where its used today and why tokenization has been applied since the birth of the human beings.

Let’s proceed step by step.

The essentials of tokens and tokenization

First step: what is a token? In accordance with the Oxford English Dictionary, we can identify it as “a word or object conferring authority on or serving to authenticate the speaker or holder”.

Considering this definition, a token is a representative symbol or format for a particular type of data that will be useful to use for a specific aim.

In ancient societies, stones where used as a representation of the votes of each person. People used to put their signed stone in the space reserved for a determined policy party: as we can see the stones where just tokens for votes. Giving an object a value is an example for tokenization.

It is the process that replaces a sensitive data with a unique symbol in order to make easier the use of that particular data for a specific aim.

The advantages of tokenization and its uses today

The biggest noticeable advantage of tokenization is that it minimizes, simplifies any amount of data and put it under a unique symbol.

Moreover, tokenization allows to enforce the security of a specific sensitive data. This kind of tokenization is frequently used in online and store payments, like ApplePay

In fact, POS or online servers never possess our credit card data, they have a tokenized encrypted version of it, because retailers are not allowed to store our banking sensitive data.

The reader can easily understand the potentials of tokenization, it could be used also for other types of personal data such as medical information or online voting forms.

A new horizon of tokenization thanks to the blockchain technology

First, what do we know about blockchain? A blockchain is a database, storing information that cant be hacked or altere, and confirms its activities through a larger network of distributed computers, a peer-to-peer network.

Blockchain is therefore made for transactions. If we can imagine the use of tokens for a limited cryptocurrency such as bitcoin, we are open to idea of other asset representations. Such as real estate, private property, land or equity.

Thanks to the blockchain we can register tokens that represents assets and exchange them just like a currency; this allows to make an asset liquid that otherwise would be illiquid. An auctionhouse could offer 1/1000 of a piece of the Mona Lisa and trade it in seconds. We have to open up ourselves to a world of different investment methods. Since the ICO-goldrush we are working on more secure and less volatile version of this technology.

The more companie make use of the blockchain through tokenization creates a revolution in the transaction world.

TaoDust:Equity Tokenization

So, does TaoDust combine equity crowdfunding, blockchain and Tokenization?

If a company decides to raise funds through selling of equity they can make use of the TaoDust platform. TaoDust tokenizes the equity (regulated by the FMSA)and makes it liquid to acquire and sell on its user interface. The buyers can benefit from a real life representation of company equity and invest as easily as supporting a crowdfunding campaign. In order to secure the data, we are using the most established blockchain for smart contracts: Ethereum.

This means that the company equity will be as liquid as never it has been before with the classic investments rounds or equity crowdfunding campaigns.

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