By Rob Viglione
Amid all the disruption this decade has brought us, it’s clear that blockchain technology is here to stay. With its potential to transform many industries, it is no wonder that businesses are realizing the potential of blockchain and exploring ways to adopt this innovative technology. One of these means is tokenization, which offers many advantages to companies.
Tokenization is the process of converting an asset into a digital token that can be stored on a blockchain. This token can then be traded or used to represent the underlying asset. Notably, financial security is enhanced by tokenization, as tokens are stored on a decentralized ledger that is extremely difficult to hack.
Transactions made using tokens are also transparent, which means that all parties involved can see what happened at every stage of the transaction. Additionally, tokens cannot be altered or tampered with once they have been created. This guarantees complete immutability.
All of these factors make tokenization an attractive option for companies looking to adopt blockchain technology. By tokenizing assets, businesses can benefit from increased security, transparency, and immutability, all of which are essential in today’s fast-paced business world.
With its many benefits, tokenization is ripe for enterprise adoption and some pioneers are already making strides to integrate it into the business ecosystem.
Goldman Sachs is one of the big names in financial services taking note of tokenization. Namely, the investment bank is explore the use of non-fungible tokens (NFT) to symbolize real-world portfolio assets. This is an exciting development, as it shows that even traditional businesses are recognizing the potential of blockchain technology and exploring ways to harness its power.
Goldman Sachs’ interest in tokenization is expected to continue in the coming years as it sees the metaverse, a virtual world where assets can be bought and sold as NFTs, as a potential $8 trillion opportunity. With its ability to tokenize real-world assets, the metaverse holds great promise for driving business adoption of blockchain technology.
Unilever and SAP
Unilever and SAP are now partnering to explore enterprise adoption of tokenization, with a focus on supply chains. Legacy supply chains are often opaque, making it difficult to track a product’s journey from start to finish. This can lead to a number of problems, including waste, fraud and human rights abuses.
The partnership between the two companies aims to create a more sustainable supply chain by applying digital twin tokens. These tokens will allow supply chain actors, as well as customers, to better see the materials and processes behind a product.
SWIFT: Clearstream, Northern Trust and SETL
Another example of companies exploring the use of tokenization is a pilot program conducted by FAST. Global provider of secure financial messaging services explores interoperability in asset tokenization market. This pilot was conducted with Clearstream, Northern Trust and SETL, a Citi-backed blockchain company.
With its network of over 11,000 institutions in 200 countries, SWIFT is uniquely positioned to engage in the future of tokenized securities. This pilot program is an important step in exploring the use of tokenization for enterprise adoption of blockchain technology.
Adobe, the company behind Photoshop and the ubiquitous PDF format, is another company exploring the application of tokenization. In October 2021, Adobe has launched its content attribution feature, which allows creators to export their images directly to select NFT exchanges. This service allows artists to protect their work from fraudulent claims by irrefutably proving their provenance before minting them as NFTs.
With its vast network of Creative Cloud subscribers, Adobe has the potential to dramatically increase the adoption of NFTs. This new service is a great example of how tokenization can be used to combat fraud and increase trust in digital assets.
The Industrial and Commercial Bank of China (ICBC) is the largest bank in the world, with over $5.6 trillion in assets. The bank also has 40 blockchain applications that processed a total of more than $48 billion in transactions last year.
As part of the company’s tokenization initiative, carbon credits issued by the transportation commission as non-fungible tokens can be exchanged for China’s central bank’s new digital currency. This system is already in use in the city of Qingdao, where it removed 99,000 kilograms of carbon. The program is expected to expand to other cities in China, which will help increase the adoption of NFTs.
Kakao, the company behind South Korea’s dominant mobile messaging app, KakaoTalk, has also entered the NFT space. In May 2021, Kakao launched KraafterSpace, an NFT marketplace integrated with OpenSea.
Users can purchase tokenized artwork directly through KakaoTalk with Klip Drops, the digital wallet that accompanies the platform. With its large user base and integration with OpenSea, Kakao is well positioned to increase enterprise adoption of NFTs.
nornickel, the world’s largest producer of palladium and refined nickel, issued $1.3 billion worth of token contracts for its precious and base metals. These contracts are stored on the Atomyze blockchain and can help industrial companies track the origin and environmental integrity of their metals.
Enterprise adoption of tokenization is on the rise
As we can see, a number of companies are exploring the use of tokenization. From traditional institutions like Goldman Sachs to tech giants like Adobe, companies are recognizing the potential of tokenization and its benefits for enterprise adoption of blockchain technology.
The barrier between tokenization and the masses is also broken. New options are emerging to help expand the accessibility of tokenization, including recently launched Token from HorizenMint. This automated drag-and-drop platform allows anyone, with or without programming knowledge, to create their own token with custom tokenomics.
With its ability to increase security, transparency, and immutability, tokenization is a powerful tool that can be used by businesses to streamline their operations and create more trust with customers, investors, and employees. Those who embrace tokenization will reap the benefits of greater efficiency, automation, fractional ownership options, and increased liquidity – all of which can help businesses thrive in Web 3.0.
Rob Viglione is the co-founder and team leader of public blockchain Horizen, as well as the co-founder and CEO of Horizen Labs. He holds a doctorate. in finance, an MBA in finance and marketing and a bachelor’s degree in physics and applied mathematics. Previously, he was an advisor at Aave, HeroEngine, and worked as a software project manager for the US Air Force.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.