The present and future of tokenization
Widely seen as the perfect bridge between crypto and traditional finance, and perhaps the most obvious form of crypto integration into the traditional financial system, the concept of tokenization has been gaining ground recently.
However, crypto enthusiasts are innovators at heart and are unlikely to leave different options of crypto evolution unexplored. This fact is reflected in the number of different paths into which tokenization is splitting off as everyone tries to improve existing ideas and come up with entirely new ones.
Currently, NFTs (or “non-fungible” tokens) represent one of the most significant areas of pursuit for tokenization. This refers to use cases in which each individual token or set of tokens has a different value than others. The best example is real estate, where a token representing one property has a different value than a token representing another property.
Non-fungibles have also gained traction in the gaming industry, eliminating fraud in the exchange and ownership of in-game items. While non-fungibles aren’t going anywhere anytime soon, the future of tokenization is likely to belong equally to other uses and manifestations, such as stablecoins.
Stablecoins essentially tokenize and digitize real-world assets, ranging from fiat currency to raw resources. A wide range of ventures, including eToroX, are using stablecoins to utilize all the advantages of crypto without the notorious instability of Bitcoin, by pegging their value to real-world assets with a preconceived value determined by more than simple supply and demand.
Banks and governments are even exploring the concept of stablecoins. China, in particular, recently made headlines over its plans to issue a digital form of the Yuan to be controlled by the central bank. While controversy surrounds these efforts, due to the lack of decentralization and transparency that’s generally intended in crypto, they do mark a meaningful governmental foray into the world of blockchain and digital finance.
Overall, enthusiasts and innovators have latched onto tokenization as a realistic and palatable way of combining crypto and traditional finance at the very least as a bridge to the future of a completely digital, blockchain-based global economy. Institutions in and outside of government are beginning to see the advantages and inevitability of tokenization, asking themselves not whether it should be implemented in the wider economy, but how best to do it and who will do it first.
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