Tokenization Is Changing The Global Economy

Digitalization continues to penetrate all spheres of life rapidly, and blockchain technology actively contributes to this. Ten years ago, we couldn’t imagine our world without bureaucracy and intermediaries, and now the possibility of a quick interaction with partners, organizations, and even states is available to everyone.

We can say with confidence that the digital economy is an integral part of globalization, and now this direction is at the next stage of transformation.

In this article, I’ll share my thoughts on how relatively young blockchain technology is capable of revolutionizing an outdated economic system.

Blockchain as the basis of transformation

There are many articles and materials on the network about what blockchain is. Therefore, I will not dwell on this point and will formulate this term as follows: the blockchain is a database into which information about all transactions is entered and stored. At the same time, the blockchain network operates in a decentralized manner, which means distributed storage of data. So, it’s impossible to change or delete anything from the blockchain.

Based on this, we can highlight this technology’s main advantages: decentralization ensures immutability, an open register guarantees complete transparency, all transactions take place without intermediaries, and anyone can get access to the system 24/7.

By introducing blockchain into the global economy, we’ll be able to get a convenient system that will work without the banks and states intervention, even multimillion transactions will be carried out in minutes, and corruption and bureaucracy will disappear altogether, thereby increasing the level of trust in the authorities and state structures.

The blockchain economy is based on three pillars — attracting investments, tokenization, and smart contracts. The combination of these components forms an excellent trend for changing the traditional economic system.

Time-appropriate economy

Now I propose to consider tokenization as one of the transformation process’ foundations.

Digitization of physical assets and storing them in a distributed ledger is called tokenization. This scenario is extremely convenient, especially when compared with assets such as gold or oil.

Previously, all institutional investors and large funds preferred to hedge their portfolios in gold. Nowadays, more and more financial market sharks are moving into the digital world and using cryptocurrencies for their own purposes.
Making transactions on the blockchain is much more comfortable, faster, and more profitable.

On the other hand, there are securities, but this option isn’t perfect too. Transactions are concluded on trading exchanges, and monetary transactions are carried out with the participation of banks. Thus, now the financial system is completely dependent on intermediaries, whose participation is necessary for the work of two parties. So, blockchain eliminates intermediation and unloads the economic infrastructure as much as possible.

The legal aspect of this issue is also important: blockchain is the most convenient form of storing non-material assets. Many lawyers agree with this, as digital assets are easier to store and transfer. In fact, in order to issue a token, you must have physical security in the form of a real business. And this approach goes well with both business and legal processes.

One cannot fail to mention the benefits of smart contracts in the legal industry. This tool guarantees the execution of the transaction and simplifies the procedure for resolving possible disputes. In addition, blockchain has proven itself to be a reliable way of making payments and verifying ownership.

Moreover, tokenization greatly simplifies the procedure for processing transactions. One of the positive examples of asset tokenization is the first registration of an international loan through the Ethereum network by the Spanish BBVA bank. As a result, the blockchain accelerated the procedure and ensured transaction transparency.

I’ll also give a rather banal but interesting example — raising funds for your business becomes much easier if you issue tokens backed by assets. With this approach, you can not only raise money for your project’s implementation but also demonstrate the real demand for your idea on the market. This principle is presented on the crypto market in the form of ICO, IEO, and STO.

Blockchain economics is the next step

We’re already seeing positive blockchain adoption by both regulators and big businesses. Based on the above, the blockchain economy is capable of revolutionizing an outdated system, and it’ll create a new infrastructure for the operation of the business industry and even states.

It is this technology that, with the help of tokenization and its advantages, will provide humanity with simple processes without corruption and bureaucracy, with transparent, fast, and profitable transactions.

Moreover, tokenization will open up the opportunity for everyone to become an investor and make secure transactions for any amount outside the centralized banking environment.

According to the current trend, this year, the blockchain industry, including the adoption of cryptocurrencies, will reach a new level and lay the foundation for a real revolution in both macroeconomic processes and financial interactions between people. And this will be just the beginning.

Author bio

Oleg Kiyan, CMO at​​ WhiteBIT crypto exchange.​ Creative yet data-driven marketing executive with 6+ years in digital marketing, entrepreneurial mindset, and deep SEO expertise. Conceptual, analytical, and hands-on strategist with expertise in leveraging market research and customer insights to create high-impact branding and marketing initiatives that drive positive ROI, revenue growth, market penetration, and brand recognition. Find him on LinkedIn.