Welcome to token economy
When everything changes,
it’s time to change
Without Blockchain there would be no token economy, but without token economy Blockchain would certainly not have the same innovative potential. It would be an incredibly useful technology for some sectors – agri-food for example or the insurance branch, due to the possibility of recording and tracking data in a certain way – but decidedly not very interesting for others.
With the token economy, instead, everything changes: an economy based on token, digital tokens through which it is possible to create value, exchange corporate assets and establish new forms of relationship with customers and stakeholders.
What’s a token and why is it so important?
Technically speaking, tokens are nothing more than digital units managed and exchanged within the Blockchain. What makes them valuable is the fact that they can represent the right of ownership of an asset, of access to a service or any other form of economic or use value.
In the token economy (or tokenomics) goods and services can be transformed into token and managed by a smart contract which defines its characteristics and properties. The decentralized structure of the Blockchain then allows you to exchange the token without intermediaries and in a totally secure way, guaranteeing transparency and traceability of transactions.
Theoretically, anything can be tokenized, whether physical or digital: corporate assets, shares, bonds, shares in movable and immovable property, works of art but also the right to vote, use or participate.
Smart contract:
Code is the new Law
At the basis of the issue of token there are particular computer protocols that have the task of ensuring that a certain operation is carried out under a certain condition and that the rules written within are respected. They are defined smart contract and are able to automatically activate certain functions upon the occurrence of the conditions established by the parties.
Within a Blockchain, the smart contracts acquire even greater value, becoming the tools on which the whole token economy is founded.
When the contract
is a smart contract
Goodbye intermediaries
The smart contract replaces traditional intermediaries: the code and the decentralized register of the Blockchain are the warrantors.
Transparent accountability
Rights, duties and contractual obligations of each of the parties involved are clear and visible to all participants of the network.
Super partes security
Each transaction is automatically settled by the smart contract, which in advance verifies the actual achievement of the results or the fulfillment of the obligations under the contract.
Verba volant, smart contract manent
All transactions recorded on Blockchain by smart contracts are immutable, irreversible, always traceable and verifiable over time.
Fungible tokens:
a new resource for companies
As part of the token economy, there are many types of tokens, which differ according to the use for which they were created and the Blockchain platform that they use.
However, what unites all tokens is the fact of being exchangeable, transferable and safe. Tokens of this type are defined fungible (fungible tokens), because they all represent the same digital unity and do not differ from each other. A classic example is the cryptocurrencies, as Bitcoin or ETH.
Thanks to fungible tokens, it is possible to divide an asset or a right and sell the shares in the form of token. Issuing tokens, a startup can launch a crowdfunding campaign, a company can finance its own development or that of its own product, an investor can diversify his portfolios and even small savers can have access to investments that would never have been within their reach before.
In general, the tokenization has a great merit: making the economy more fluid, creating new tools for redistributing value and offering the possibility for anyone to build businesses that are scalable, therefore more efficient, secure, versatile and functional.
The ABC of token economy:
the main types of fungible token
It is possible to classify tokens according to several criteria. Simplifying and considering the function as a reference parameter, we can distinguish 4 different classes: cryptocurrencies, utility token, equity token and security token.
Cryptocurrencies
They are the classic digital currencies such as Bitcoin (BTC), Ethereum (ETH), Litecoin, Dash or Binance (BNB), the price of which is established by the market.
Utility token
These are tokens that can be spent only in a specific Blockchain ecosystem to purchase a service or good, just like a traditional voucher.
Equity token
These fungible tokens represent a share of ownership of an asset (tangible or intangible) or the shares of a company.
Security token
They are financial products that represent the value of an asset, based on the expectation for those who buy them to obtain economic benefits.
NFT: the world of non fungible tokens
Inside the token economy also exist tokens associated with rights or unique objects and therefore not interchangeable. The NFT (non fungible tokens) can represent any type of digital or physical asset and find many applications in the management of digital identity, in digital art and in the sector of collectible.
