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Why is the token revolution just beginning?

If you have not yet heard the term tokenization, you had better not waste any more time. Sooner or later, this new business model is going to be part of your life – whether you are prepared for it or not. The transformation of physical assets into digital assets is the big technological trend that is looming in the most different sectors, to the point of transforming entire areas and creating an economic dynamic of its own.

This expression has gained strength in the last few years by naming a direct consequence of the digital transformation we are currently experiencing. Now, if most of the processes that govern different aspects of our lives are migrating to the virtual environment, it was obvious that financial assets would follow suit. The question was how to do this securely, transparently, and, of course, efficiently without putting the goods and assets of people and companies at risk.

The answer lies in the popularization of blockchain technology, which has gained momentum through cryptocurrencies in the last decade. Once the initial resistance had passed, it was clear to everyone that there was no better resource for digitizing real assets. Besides protecting the information by dividing it into small encrypted blocks, making it almost impossible to change, it offers the possibility of asmart contract, which serves as a document to determine the rules of operation of that asset.

Therefore, in a scenario that discusses the possibility of the metaverse and digital acceleration in virtually all of our lives, it is tokens that will ensure the success of financial transactions in this new reality. Today this concept may sound strange or even worry many professionals. But make no mistake: in the near future it will be as popular as the Internet itself.

Tokenization is still in its early stages

Despite all the excitement and the different projects that already exist around the world, the tokenization process is only just beginning. In other words, there is still a lot of room for growth and consolidation through the success (and even failure) of some cases. Several industries are beginning to explore the possibilities that this concept has to offer in their business models.

To get an idea, a survey by consultancy MarketsandMarkets estimates that the global tokenization market is expected to grow 19% per year through 2026. The sector will grow from $2.3 billion in 2021 to $5.6 billion five years from now. The growth is driven precisely by the wide scope of adoption among consumers, which causes different companies to start investing heavily in the subject.

In addition, two more topics need to be highlighted. First, is the low number of companies and, especially, of professionals dedicated to facilitating this procedure – as with anything new, new knowledge is required. This is reflected in the second issue, which is the need to update the regulatory frameworks that govern topics such as technology and finance.

This is the perfect combination for the consolidation of tokenization in the most different markets: there is a growing demand among users, room to build innovative projects, intense public debate about its possibilities, and the advancement of the workforce together with the technology itself. It is just a matter of time to advance further on the global stage.

And how far can it go?

Of course, every exponential growth phase of a technology is followed by a consolidation and maturation phase. But what about tokenization? Simple: full utilization in all sectors. Because of its numerous possibilities, since it can serve as an access key, a currency of exchange, and a platform for engagement, it tends to gain space in the most varied markets.

The retail sector, due to its innovation and closeness to consumers, has come out ahead in this race, according to the aforementioned MarketsandMarkets survey. It is not difficult to find large retail chains that use tokens to promote relationship programs and offer discounts and promotions as a way to attract and build customer loyalty.

However, other far more complex industries are also exploring the opportunities of tokenization. The real estate market, for example, is beginning to develop the first projects with the mission of reducing bureaucracy and democratizing access to enterprises. The mining industry, meanwhile, uses tokens to facilitate precious metal trading. Automotive companies already anticipate receivables with this technology.

As you can see, even the most complex and bureaucratic areas see tokenization as an efficient way of doing business and finding new opportunities. This new model will grow a lot precisely because it facilitates processes and expands possibilities. So don’t be surprised by what will happen in the future. The token revolution is just beginning!


Source: Impactmore

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