Brave new world of tokenization

In this guest blog post Mr. Karsten Treiber, Director Digital Finance with targens GmbH, gives insights into tokens in the blockchain environment and the most mentioned one: the ERC20 Token. He sums up what it actually is and why tokenization changes the world.

 

Internet of Value

Whenever we talk about wallets or how much bitcoins are in a wallet, this statement is actually wrong. The crypto currency is rather held in a system, i.e. the chain, visibly for everyone. But what is it that is transferred if not the coin? It is the proof that a person indeed owns shares of the currency. The currency itself it is not transferred, just accounted for which is the task of the so-called ledger. The blockchain therefore indicates the ownership, e.g. just as some kind of distributed bank statement.

If we get rid of the concept that coins are only manageable in the blockchain as currency, we reach the digital asset, e.g. a digitized certificate. Each value can thus be digitized and traded. Examples of that are securitizations, just as it is the case with bonds, property, real estate, movables, art, jewelry, organizations (DAO) or company shares (ICO). Sky’s the limit!

 

The ERC20 Token

A special breakthrough was reached when the ERC20 token (Ethereum Request for Comments) was introduced. It is practically the standard when you create digital assets. That is what made it easy to create and trade these assets like coins. The ERC20 enabled ICOs (Initial Coin Offerings) to break through. This ongoing process will affect the way we do business immensely. All kinds of administrational processes will be optimized and automatized. The security of digital and distributed documentation is lifted on a higher level.

ERC20 norms the names and amounts of assets, the administration of the respective possession as well as the kinds and terms for the transfer and requirements. This also means, that the behavior of a digital asset can be directed by the respective developer. He could, for example, determine the purpose or prerequisites for a transfer inside the actual digital asset.

We can only speculate the effects this future technology will have on the current use cases. I think that the tokenization will play one of the main roles in respect to blockchain.

The topic of tokenization will also play a major part at the Blockchain Hackathon. We are especially looking forward to any idea that helps combine and connect the challenges.

 

If you are interested to learn how to “Create your own Crypto-Currency with Ethereum” this ethereum Article will guide you through. Or just take a look to the “Ethereum Tokens Market Capitalization” to get a feeling about tokens in the market.

For German readers we recommend the blockNEWS “Anbruch der Tokenisierung” and the blockFUNK Podcast „Tokenisierung“, both from the blockLAB expert group.

 

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