April 13, 2021

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What is Tokenization?

Tokens for “digital tokens” representing assets; They search from a blockchain (i.e.

a distributed database of a blockchain) that was created for a specific cryptocurrency, and its coins are used as a means of payment in a given ecosystem. In a particular blockchain network, you can see different tokens, where this is our Tecra Space platform, where each creator issues his own Space Token of his project, which is an unforgettable confirmation of the contract between the investor and the token creator.

So tokens are not really a currency or a security, but have some characteristics of both. They also have their own unique characteristics; hence their valuation is complicated. Let’s look at an example of a Space Token that validates a contract between the token holder and the creator. After the final product is released to the market, the value of the token will depend on the demand for it – that is, the success of the commercial project.

 

What is Tokenization?

The types of tokens exist because of their wide range of uses. Below you will find the most popular of them.

The security token is a confirmation of ownership, so it works as a security. People who have it do not have ownership of the product in which they have invested, but are guaranteed up to a certain percentage of the profit generated by it. Their exchange is possible only after passing KYC (Know Your Customer) / AML (Anti Money Laundering), i.e. customer data verification processes that are designed to protect against financial fraud. Security tokens are therefore a good way to use in decentralized social financing as they increase the security of transactions. The sale of such tokens is called STO (Security Token Offering).

Equity Tokens. Equity is more like traditional assets because their owners have the property rights to the product – a token is therefore a record of a percentage of ownership.

Utility tokens or digital assets. The factor that distinguishes the utility from e.g. security tokens is the possibility of anonymous exchange. They are most often used within a given platform (eg Ethereum) and are a kind of coupon or “loyalty package”.

Tokenization is about creating your tokens and giving them a specific value. It is a kind of change of conventional stocks into alternative instruments.