WRITTEN BY LAURIE LEHMANN
Tokenization is an avenue for optimizing business processes involving multiple partners. What does tokenization mean? Essentially it is a process where a company uses digital tokens to prove ownership of hard assets on the blockchain. These include artwork, a ship or truck, raw materials, or real estate – anything of value. Once an asset has proven value through an evaluation process, it moves to the blockchain. Then, it is used as part of a smart contract to transfer ownership as part of any deal-making between parties.
Essentially, this is a process, and not one undertaken lightly and without expert assistance. For B2B enterprises, token-based assets are transferable quickly. Traditional methods host a considerable delay between the transaction time and the settlement of money and records. What makes it all possible is that the industry is working towards developing standards and governance frameworks around tokens enabling interoperability across networks.
The Benefits of Tokenization
- Transactions between parties are settled immediately on the blockchain alongside the trade. This process saves precious time and money. It eliminates the need for a bank, government agency, or other third parties to legitimize the transaction.
- An intangible or illiquid asset (i.e., real estate / IP) can be tokenized and made available for trading, providing liquidity and realization of value.
- It allows customers to move tokenized assets offered by companies that use loyalty or reward programs to the blockchain. Tokenization increases the value of such programs and expands the overall use to keep and engage customers.
Starbucks is one of the first companies to introduce this concept. Their new Oddessy program provides customers with a brand-new experience combining the company’s successful Starbucks Rewards loyalty program with an NFT platform. Accordingly, customers can now earn and purchase digital assets that unlock exclusive experiences and rewards.
Learn More by Attending the D2 Summit
This concept is tricky to understand. And much has been written and shared about it. One of the best ways to learn more is to attend the D2 Summit’s inaugural event, October 18-19, in New York City. A panel of industry experts will discuss the topic as part of a panel on USD-USDC banking. Explicitly they’ll cover how the future of interoperability of payments means better business. Will you join us?