Tokenization Is Expanding: Overview

 

If you've been hanging around the blockchain assets niche for long enough, chances are that the terms tokenization and tokens are familiar to you, especially within the context of cryptocurrency. However, not everyone fully understands what tokens are, or, by extension, what tokenization is in a broader sense, nor why so much potential has been seen in it for some time.

 

Suffice it to say, it has a host of uses, which may surprise the average person interested in trading solutions or a crypto trader making use of the cryptocurrency data API. So, tokenization has many different uses, while the examples may seem random, let's break them down.

Contents:

- Lower costs and greater transparency

- Areas of potential expansion

- Shifting focus to practical use cases

- Payments space

- Securities space

- Future: Metaverse as a hub for digital assets

- Final thoughts

Lower costs and greater transparency

The term tokenization can be defined in a few ways. The first notable definition speaks of it being the path with which sensitive data is substituted with non-sensitive values. The second definition speaks of it being the translation of real-world assets into digital equivalents, and it is also known as Web3 tokenization. Regardless, the idea behind both definitions is more or less the same, with the technology backing them being blockchain tech as the basis.

 

Because of this tech, tokenization of anything brings with it a host of benefits, which center around the decentralization idea, which seeks to take out the “middleman” in various areas. These benefits vaguely look like the following:

- It helps cut costs

- It helps with data security

- It helps with transparency

Areas of potential expansion

While the above is fairly vague on the impact of tokenization, the best way to truly see this is by looking at how it's used currently. The most obvious demonstration of tokenization in the modern world comes in the form of non-fungible tokens or NFTs. They're essentially a digital representation of one's ownership of an asset and because they are on the blockchain and are indeed non-fungible, they can't be replicated.

 

This means that whatever you own in that digital realm is unique to itself, making it quite valuable. So valuable can NFTs be in fact, that they can take the form of several varying things such as:

- Music

- Art

- Videos and Physical properties

Shifting focus to practical use cases

According to a CNBC report published on March 10th, 2022, the NFT trading market was worth over $17 billion, and that alone was an incentive to get into the space. Those days have since passed, however, with many being quite pessimistic concerning their comeback.

 

Fortunately, tokenization isn't limited to the purely crypto sphere and may find uses in other areas. Two other notable areas include the following:

Payments space

One of the aforementioned benefits of blockchain technology is the fact that it's rather secure. This is especially helpful when it comes to the protection of sensitive data, which includes any sort of personal banking information.

 

The idea is that if you're purchasing a card, for example, the code you use will be stored on the platform in a tokenized manner. This means that it will be scrambled into random values, thereby protecting that sensitive data from malicious actors who may seek it out.

Securities space

Earlier in this piece, it was hinted that some of the people who would be interested in tokenization would be the people seeking out trading solutions. Tokenization finds itself in the realm of the stock market in the form of the security token. They operate under the same principle as regular stocks, which means that standard strategies and use of tools such as the stock price data API, or an API for institutional ownership data is still used. The only difference is that they exist on the blockchain, making them fairly easy, and inexpensive to issue.

 

It should be stated, however, that the space is still growing, and that does raise some concerns about how that works in the present. A major concern regards how regulations regarding tokenized stocks aren't entirely developed, which makes the aspect of security overall questionable. Regardless, it is still developing, which means there's value to be found.

Future: Metaverse as a hub for digital assets

If there's anything that shows that tokenization expansion is very much a thing, it would be the Metaverse, which is essentially a virtual world of sorts. In this digital space pretty much everything this piece has discussed is present, with NFT usage being particularly prominent.

 

In this space everything from interacting with other people, and a myriad of economic activities can take place, making the metaverse and interest in it proof of tokenization's expansion. So if we talk about tokenization as the act of transforming real or digital assets into blockchain-based tokens, you can enable assets to be represented, purchased, sold or traded in a secure and transparent manner. This tech basically thrives in the metaverse, which provides a virtual marketplace for assets like:

- Non-fungible Tokens (NFTs) or virtual real estate, art, collectibles and in-game objects.

- Cryptocurrencies: transactions and micropayments across platforms.

- Decentralized finance (DeFi) solutions that offer lending, borrowing and staking opportunities

Final thoughts

The premise of this piece was to show that tokenization is expanding, and in a few ways, it has been so even in the recent past. As those who are interested in NFTs know, tokenization going forward will be a thing, especially in the metaverse, which continually garners interest.

 

Tokenization goes beyond this; however, traders of securities who still use traditional tools can have easy access to them or issue tokens representing the assets themselves. While it is true that there is room for improvement, as nothing is settled yet, this alone shows that there is potential for the further growth of tokenization. Whether you're building quantitative models, conducting statistical analysis or developing data-driven trading systems, the comprehensive API can empower you with the tools to make data-backed decisions within cryptocurrency.

You can get your Real-Time and Historical DEX Data with a free DEX Data API key.

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