Blockchain technology is transforming how companies execute their operations as it's making complex processes more agile and dependable. In addition, with the robust advent of decentralization across industries, companies can scale their business more efficiently.
One powerful phenomenon of blockchain technology is the tokenization of data to enhance overall security and drive more agility for businesses. Blockchain tokenization is not a modern concept, but the rate at which it's growing is unparalleled. As enterprises are leveraging blockchain tokens in multiple formats, it will disrupt the traditional technologies soon.
Before we begin with how blockchain tokenization makes your business future-ready, first understand what tokenization is.
What is tokenization?
Tokenization is an advanced method of converting sensitive data into nonsensitive data called "tokens." Companies can use these tokens in their internal and external data sharing operations to preserve the sensitive nature of the information. In simple terms, tokenization secures sensitive data by altering the original data with dummy values of the same length and format. With this process, it becomes easier for businesses and individuals to share and receive sensitive data without compromising its security.
Compared to encrypted data sets, tokenized data is irreversible and undecipherable. Furthermore, as there is no mathematical correlation between the original and insensitive data, it becomes impossible for intruders and hackers to reverse engineer the data set to obtain authentic information.
Working of Blockchain-based tokenization
Blockchain is a decentralized technology, and when the tokenization concept works along with blockchain, the security enhances significantly. Now, the data is in token format, and it's distributed across the decentralized chain of the blockchain ecosystem.
Blockchain tokens are based on token contracts and smart contracts technologies, making them easily accessible to respective parties. Token contracts define details that impose the validation of business rules, including transferring data or assets from a user's wallet to another.
For implementing smart contracts to form blockchain tokens, account-based and UTXO models are used. UTXO is among the most powerful and commonly-used protocols used by several platforms like Bitcoin. On the other side, account-based models are used by networks that run on the Ethereum platform. In an account-based model, companies need to maintain a database to store tokens' current state details in real-time.
How blockchain tokenization makes business more agile
There are several ways blockchain can make a business agile and prepare for future disruptions. Some of the most impactful aspects are:
Ease of transfer
Blockchain toke makes it easier for businesses to transfer assets, information, or ownership in a more identical & real-time manner. Contrary, there is a slight delay between transaction time and the settlement in conventional transactions. The ease of transfer clubbed with the security of tokenization makes the business more agile.
Realization of intangible assets
Another most significant advantage of using blockchain tokens is the real-time realization of intangible assets and the value of illiquid assets. With this decentralized tokenization process, an intangible data set or an asset is easier to tokenize and enhance the overall trading or shareholding of data or the assets. Blockchain technology streamlines value realization and liquidity among all respective partial owners.
Mitigating third-party dependencies
To achieve higher agility and make business future-ready, companies need to focus on making their operations more independent and robust. Blockchain helps business owners do this by assisting them in mitigating third-party dependencies. In addition, with blockchain, companies can establish an end-to-end decentralized medium for transactions and save substantial money.
Tokenization in NFT
Other than business aspects, blockchain tokenization can do wonders in preserving original art pieces or important physical documents. Businesses can convert their valuable physical assets into NFT, and using blockchain tokenization, it becomes easier to improve the overall security of that NFT as well. Tokenization of this kind of assets makes it much easier to market and trade these assets.
The future of blockchain tokenization
As blockchain applications are growing rapidly to make this digital space more secure, the use cases of this technology will grow in the future. Companies can make their processes more agile and dependable using blockchain and tokenization. Blockchain will help companies stay ahead of the curve and drive more innovation and intact data security.
Transform your business with Seven Bits
Seven Bits helps your company to stay relevant in the business domain by implementing the needful business transformation. With years of experience and the support of more than eight public & private blockchain frameworks, we meet your every business goal with perfection. Our Blockchain Center of Excellence (CoE) team understands your every requirement and drafts a bespoke growth strategy.
We can make your business more secure, agile, and growth-centric using blockchain tokenization and other robust applications. Whether you want legacy platform migration or cryptocurrency exchange development services, we have got you covered. Get in touch with us at firstname.lastname@example.org to explore more about how blockchain can make your business grow faster.