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Reality and Possibilities

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We are witnessing a blockchain revolution. The development of clear standards for sharing financial help from the real world to the digital world through the tokenization app is in the interests of all global financial market players. This interest is increasing as the tokenization of financial assets and transactions offers the benefits of distributed system technology and access to crypto-financial markets while retaining all asset characteristics.

The latest security protocols guarantee online payment of services. Online stores and payment services protect customer payment and debit card data. Companies audit PCI DSS certification annually to safeguard customer data according to the latest international standards. One of the most modern forms of data protection is tokenization. Let’s take a closer look at what this process is. Tokenization is a technology that secures electronic payments using data encryption systems. Tokenization allows payments without disclosing the customer’s card/account details. Card information (card number / CVV code, etc.) is replaced by a unique digital identifier (token). Tokens protect personal data and financial transactions by encrypting and transmitting card data. Tokens are generated according to a mathematical formula or a random alphanumeric generator and have no value, so attackers cannot use them.

Why do we need tokenization?  maximizes the security of payments and financial transactions and enables contactless payments (for example, via smartphone). The main advantages of tokenization are ease of cost, safety, and reliability. What the tokenization process looks like When paying at the cash register or online, card data is sent to a secure gateway and a particular reader that converts the data into tokens to complete the transaction. Financial information is encrypted and not sent directly. In this way, your payment and card details are reliably protected from hackers. Tokenization is currently the most reliable payment method for global e-commerce. Tokenization is actively working in the field of electronic commerce. Given the pace of development of contactless payments and technological solutions, we can expect intensive use of this technology in the coming years. Are you ready?

The concept of blockchain

A blockchain can be defined as a chain of transaction records (blocks) where each subsequent document contains information about the previous form. Such lines are created according to specific rules and stored in network nodes. All blockchain information is cryptographically protected and has a defined (consensus) mechanism for making changes. Each blockchain node contains a complete chain of transactions (the entire blockchain). Thus, the immutability of input information is ensured by duplicating it in each node. Manipulating a transaction (block) in the chain will inevitably cause all subsequent blocks to become inconsistent.

The functionality of the blockchain can be explained with the following very simplified example. Imagine a network of entirely independent computers around the world. Each of these computers is a node. A set of information is stored on the hard drive of each computer, which is processed using the blockchain. Such a network consists of fully interconnected building blocks. All disk arrays are precisely the same. Array changes made include changes to all nodes (in this example, computer hard drives). Just as changing a block in a chain update subsequent blocks and is rejected by the network, unauthorized changes made to a stream on a single node are rejected by the network. The main technical features of blockchain technology are the cryptographic protection of information and the use of decentralized records and smart contracts.

This allows the blockchain to:

Transactions are self-executing, eliminating financial intermediaries (such as banks) in commerce and requiring only the actions of the originator of the contracts.

Transactions are kept intact and immutable in distributed technology, eliminating the need for intermediaries (notaries, registrars, etc.) to maintain records of transactions.

This solves the problem of “double sales.” In other words, it eliminates the fraud of two buyers trading the same asset simultaneously.

A completely open database with a complete history of transactions (transfers of digital assets) is offered.

A token can be considered the basic unit of account or value issued by a stakeholder in a particular blockchain. Physically, tokens exist as records in distributed blockchain technology, and the most common type of token is cryptocurrency. However, from a technical point of view, classifying cryptocurrencies as tokens is controversial.

Non-cryptocurrency tokens are usually divided into the following groups:

Share tokens are used for the tokenization of companies that grant their owners the rights of shareholders in the capital of a legal entity.

A token service token has a specific value in the token issuer’s online platform business model (for example, it may correspond to a certain amount of cloud storage or exchange for certain platform services).

Asset-backed tokens are physical goods or services digitized and stored on the blockchain, establishing ownership of those goods or services.

How is tokenization changing the way the industry views financial transactions?

Why is tokenization important? Tokenization transfers ownership rights to digital tokens in the blockchain, connecting asset information to the blockchain on which tokens are issued. The Ethereum blockchain is often used to issue asset tokens for various reasons.

By assigning its unique identifier to each unit of the asset, data about this asset can be recorded in a tamper-proof ledger, and further movements of this asset can be tracked. It can be said that the tokenization of financial assets creates a bridge between the digital and physical worlds and provides the highest level of information security and protection.

What are the benefits of tokenization?

Security. Tokens created on the blockchain are entered as a unique code, preventing break-ins or theft.

Skill. Tokenization of assets will make it much faster to sign contracts and eliminate bureaucratic hell on the chain, as all the necessary information will be included in smart contracts.

Flexibility. Another advantage of tokens is the possibility of division. For example, when a company is tokenized, its shares can be digitized for later sale or exchange. It also allows small-cap investors to enter the market.

Accessibility. Where transactions previously required a physical presence at a bank or stock exchange, tokenization allows us to buy and sell assets anywhere, anytime.

Asset tokenization is the perfect embodiment of the essence of cryptocurrencies and blockchain. This is when processes are simplified, and third parties become redundant. Improved tokenization will give diverse groups access to significant value. Now that virtual currencies and blockchains have firmly entered our lives, new markets are emerging; tokenization has already entered a new phase of active development.

Why are “real” assets tokenized?

Our world’s economy is full of diverse assets such as shares, real estate, gold, and oil. Most publicly traded assets require significant effort and expense to transfer physically or cannot be divided into shares.

Therefore, startups and large financial companies worldwide are trying to create a system that will be the next step of asset tokenization in developing asset exchange tools and standards. Given the circumstances, the ideal way to satisfy the wishes of all parties to the asset exchange is to tokenize product shares. Each token represents a specific part of the product (asset), facilitating ownership. Tokenization of assets using blockchain technology can significantly reduce the likelihood of misinformation, reduce transaction costs, and simplify business systems. Tokenization especially frees the financial market from bureaucracy and excessive fees. Many methods of “locking” tangible assets have been developed and are ready to be used. The main goal of the tokenization process is to make the cryptocurrency transfer itself safer, faster, and more convenient.

Screenshot of checking the level of uniqueness of the text