Table of Contents
Technological hurdles
Nascent stage
Centralization Problems
Global challenge
Every day you take your credit or debit card and swipe it all over town. Do you feel comfortable giving all your information to third parties? What if there was a way to pay without transferring any sensitive data? Well, there it is, and it’s called tokenization.
At its basic level, token development replaces data with a surrogate or temporary value. By replacing data with a surrogate value, a user ensures that hackers or thieves who might get access to the information cannot use it for any real purpose.
Creating a surrogate value is as easy as generating a random string of numbers that can be matched to the original series using a database. For example, with this credit card here, you can create a surrogate value that has no relation to the actual card number and then can match it back to that original card later.
Before tokenization, you’re transferring valuable data to that merchant when you swipe your credit card at a terminal at your favorite margin. You entrust them with your pan, your primary account number, or just the number that shows up on your card, your full name, address, and even the expiration date on your card.
Therefore, asset tokenization is a more secure and private method, and you don’t need to give the merchant your actual card number or any of your information. All you need to provide them with is this unreal value.
How does this tokenization even work well with the emergence of new mobile payment solutions such as Apple’s Apple pay and androids Android pay?
Token development has always been contested and is a challenging system to implement. Still, these big players in the market have been able to come in, make agreements with the banks and implement tokenization across the market and make it available to everyone.
It all makes sense in theory, I should be able to go to my favorite merchant, and I should be able to pay using tokens. I should have that peace of mind that I’m not handing over my credit card number. How does that work? I can’t just hand them a random number and expect my bank account to be charged.
Business models that rely on tokenization face several challenges inherent in the current token ecosystem.
For real-world assets, disputes over property rights like the responsibility for asset storage maintenance and security are particularly problematic. It could be solved using token development tactics.
Tokenized assets are based on blockchain technology and form the foundation of crypto assets like Bitcoin, Tether, or Ethereum.
However, with the blockchain technology used to tokenize assets with tokenization, the economic value and rights for assets can be linked to digital tokens.
Ownership rights to basically anything can be tokenized and stored on the blockchain, from music, real estate, and gold to various financial securities.
Tokenization can be distinguished into two groups of assets:
The tokenization of assets could provide several benefits for companies, investors, and financial institutions. While it is comparatively easy for investors in developed markets to invest in equities or real estate, this is different in developing countries.
Asset Tokenization allows fractional ownership for illiquid assets, helping retail investors access new asset classes.
Token development: Benefits in financial markets.
Antier, the pioneer in developing the Enterprise blockchain, provides tangible solutions to asset tokenization; thus, market participants and regulators could automatically audit the assets and track their past ownership reducing the market complexity.
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