“Change before you have to”, — so says one of the most influential business executives of the world Jack Welch, and it couldn’t be more true. In our constantly-changing world the ability to change, and to change quickly, is more important than ever. Nowadays, when our life becomes more and more digital, and data can be stolen or damaged, protection of personal information is the most challenging aspect for businesses. In order to provide the highest level of security for clients, companies have to change — and here comes tokenization.
Even if you don’t notice it, tokenization quickly and surely penetrates in all spheres of our life. Credit card giants Visa and Mastercard signed tokenization agreement in order to make electronic payments more safe. The American Express offers Token Service to reduce fraud and encourage digital growth. ATLANT real estate platform (called “Airbnb killer”, by the way), launches in March 2018, and will enable tokenization of real estate ownership. More and more financial services and government structures start to implement tokens. Global experts are excited about endless world of new possibilities and predict completely new way of managing business opened by usage of tokens. Tokenization is a revolutionary step to exclude human factor and guarantee the safety of all “tokenized” data.
The aim of tokenization is to minimize the usage of weakly-protected (“sensible”) data by replacing it with token, unique digital identifier, that can be used in transactions. Initially it was used to prevent credit card fraud. Tokens can be sent through various wireless networks without exposing actual bank details. All data is held in secure token vault. This eliminates the possibility of data being stolen because token is generated within and for a pre-defined environment and is useless outside it.
Even if in the process of transferring token from merchant to client someone stole it (and that is very unlikely), it wouldn’t give any information — token is useless in any environment except existing transaction. Token can be used only once, and, unlike encryption, is created non-mathematically. Tokenization guarantees data protection and transparency of transactions, letting businesses concentrate on other, not less important, aspects. Data becomes unreadable by anyone without secret decryption key. It all results in reducing the amount of systems that have access to customer information.
While in the beginning tokens were used only for electronic payments, with developing of technology now it’s time for real assets to be tokenized. Converting right to an asset into a digital token on a blockchain is not only a completely new way of selling and buying objects that are difficult to transfer, such as real estate, gold and many more, but also extremely convenient when you operate with so called “intangible assets” (non-physical assets), that are trademarks, copyrights, patented technologies and so on. In case of using tokenization for buying and selling assets, the deal consists of a chain of smart contracts for the payment and transfer of legal rights to an asset. The most important point in any system using tokenization is verifying that token is tied to the real asset. If nobody is convinced that a real-world asset underlies the token, or there is uncertainty about it, token’s price equals zero.
The perfect example of using tokens is ICO — Initial Coin Offering. ICO helps startups to raise fund for further development of the project while buyers of tokens become owners of company’s share. In this case, tokens can be associated with a specific app, project or business.
In the view of the above, you can check out Bonpay ICO that is coming soon.
You can see the advantages of tokenization with your eyes closed. Data is stored in randomly generated numbers and doesn’t have any value without decryption, so it’s impossible for fraudsters to steal any personal information. Less money can be spent to support payments security — tokenization helps to manage business in more cost-effective and protected way, and in compliance with all government specifications. Tokenization can (and certainly will) be used not only in bank transactions, but also in medical records, vehicle driver information, criminal records, stock trading, voter registration — the list is endless.
Tokenization is a breakthrough technique that requires innovative solutions and revision of obsolete ways of managing business. We must be ready to change, and after that tokens will upgrade our life to a totally new level. “Change before you have to”, remember?
