When examining the topic of blockchain technology, it’s easy to get caught up in all the complex tech talk and miss out on the bigger picture. A highly important aspect of blockchain technology that is now emerging with the rise of hundreds of ICO projects is the concept of tokenisation. It sounds pretty futuristic, but in reality, tokens as a means of trade are not a new idea at all. In fact, they have been around for ages.
Tokens are nothing more than a means of exchanging value that can then be redeemed for a product or service. Let’s ponder a few everyday examples of non-blockchain tokens: You go to the movies with friends. Of course, in order to see the movie, you have to purchase tickets. These tickets are tokens; they entitle the purchaser to admission to the movie.
Consider another everyday example. You buy a gift card from a friend’s favorite store as a present. Your friend later uses the gift card to buy merchandise at the store. The gift card is a token representing the value that was purchased and “loaded” on the card. Even something as simple as a coupon is essentially a token, representing value that can be redeemed by the user in exchange for a particular product, or at least to contribute to payment toward the purchase of said product.
One of the key advantages of tokens is that they encourage changes in consumer behaviour. For example, when given a gift card to a particular store, a consumer is much more likely to shop for goods or services from that particular business, often spending more than the token value. The business gains loyal customers and alters the shopping behaviour of customers to their financial advantage through the token system. The token reward acts as a motivator for altering behaviour in a manner that is desired and reinforced by the token-issuer.
So what’s the big deal with digital blockchain tokens? Is it really necessary to use the complex technology of the blockchain to do this or is it just a redundant fad that is already better served with gift cards, tickets, and coupons?
The big deal is this: blockchain tokens are globally transferable, can be continuously circulated, are highly portable, and cannot be altered or counterfeited.
Blockchain tokens can be sent and received to any user in the world in a matter of moments without the possibility of being lost in the mail, falling out of your pocket, or being accidentally tossed in the waste bin. They can be passed from digital wallet to digital wallet anonymously and very cheaply anywhere — far more cheaply and easily than sending any kind of tokenized object like a gift card in the mail, for example. The ease of which tokens can be passed from one user to another is obvious for anyone who has ever sent or received any kind of blockchain currency. A simple copy and paste of a given address, and tokens can be sent effortlessly at an extremely low cost.
Blockchain tokens can be continuously circulated in a trustless system from user to user without the need to convert into any other form of money. As they pass through the system from user to user, the value is passed along through the system with far less friction than local currencies going from one nation to another. And importantly, users can trust the value and veracity of tokens as they are impossible to counterfeit due to the immutable ledger that is open for the public to view, proving their legitimacy.
What are your thoughts on tokenisation
?
Rafael Dunn
Uk Community Manager
Energi Mine
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