What is token? How to use it successfully in your company? (2024)

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• What is token? How to use it successfully in your company?

• Por Cassio J. Krupinsk
• Em15/06/2022

When you heard about a construction company that is tokenizing properties under construction and saw that the quotas were very affordable, did you wonder what a token is ?

So it’s the ideal time for you to get to know tokens , this revolution in the crypto world that is boosting business in all segments with more agility, transparency and security.

From the company ‘s share offering to the sale of rights to a soybean crop, it is possible to tokenize assets, rights, stocks, bonds and even benefits, such as customer relationship programs.

Whether with the strength of security tokens or the lack of limits for creativity with NFT , you can find a type of token specific to your company’s goals.

In this article, BLOCKBR will talk about tokens and how they can increase sales and profits for your business!

WHAT IS TOKEN?

Tokens are encrypted files developed with the technology of a blockchain to digitally express the value of an asset, right or service of a commercial or non-commercial organization, people or groups.

The simplicity of the technology used, combined with the high level of security and speed, allow the use of tokens for various purposes, including:

• Trading of tangible, intangible and financial assets;
• Awards in customer relationship programs;
• shareholdings in companies;
• Possession of securities;
• Participation in commercial and industrial projects.

With so many possible purposes and advantages, tokenization will be increasingly present in the lives of companies, societies and people!

3 IMPORTANT INFORMATION ABOUT TOKENS

• They are not monetary units, they are digital representations of something that already has its value assigned;
• They do not suffer speculative attacks due to scarcity or supply control;
• They are not an investment in themselves – they are agile, simple and safe vehicles to represent the value of assets, rights, benefits, industrial projects and other items.

Do you want to know the benefits of tokenizing an asset of your business ? See our article!

HOW DO TOKENS WORK?

Tokens work as an expression of the value of an asset, right or service to which it is associated – from clothing tokens from a fashion label’s new collection to the tokenization of a singer’s music copyright.

For the existence and use of tokens, there are two fundamental entities.

BLOCKCHAIN

It is a digital ecosystem with very high processing capacity and basically composed of supercomputers (the blockchain nodes ) that validate all transactions with tokens , high-level encryption and modern security protocols.

The blockchain is the home of tokenization , where all the facts will take place. Want to know more about blockchain ? See in our article!

SMART CONTRACT

The smart contract is the digital version of the conditions – rights, duties and penalties – agreed to offer the tokenized asset.

It is at the heart of the tokenization strategy , as it gives investors confidence that the clauses will be fulfilled at the correct times and amounts – everything is executed electronically, without human interference.

Want to know more about the smart contract ? See in our article!

WHAT TYPES OF TOKENS ARE THERE?

There are several types of token according to a specific purpose for which it was created or according to the asset class it represents. Let’s talk about them!

PAYMENT TOKENS

They are the best-known tokens, as in practice, payment tokens are digital currencies , such as litecoin and ether , used as a means of digital payment and also in international remittances and other money transfer operations.

UTILITY TOKENS

They are utility tokens , created by companies to give their holder the power to use in certain situations, such as credits in their consumption relationship with a brand. The best known are related to loyalty programs and frequent flyer programs.

Utility tokens are delivered to customers/users based on the fulfillment of actions and goals – as with frequent flyer programs – and can be great investments as they are linked to services with limited supply, generating scarcity.

SECURITY TOKENS

Also called security tokens , they represent an investment in securities – stocks, debentures, guarantees and futures contracts being the most common examples.

• Widely used by companies to raise funds and finance new projects, delivering profitability in return;
• They are regulated by the Securities and Exchange Commission and offered through an STO ( Security Token Offering ), a blockchain version of IPO ( Initial Public Offering ).

EQUITY TOKENS

They are the tokens that give the right to part of the profits and the right to vote in the companies’ strategic decisions and, as with shares in the traditional market, equity tokens are divided by classes.

These classes are defined by the percentage of profits and the number of votes in the company’s decisions.

They are offered through STO on the blockchain, like security tokens . However, while these only yield on the wealth generated by the business, equity token shares also offer ownership and voting rights.

FAN TOKENS

Fan tokens are a derivative of utility tokens , but with notoriety for having been adopted as a product by football teams, artists, influencers and others.

A football club can tokenize a fan program and promote meetings with players, participate in exclusive events, give the right to vote on the choice of uniform models and other matters.

Recently, Internacional de Porto Alegre launched its fan token as well as other Brazilian clubs, following the path of big European clubs. As a result, it will capture incremental revenue for new projects.

NFT (NO-FUNGIBLE TOKEN)

This type of token manages to excel in creativity, even when it is in the company of innovations such as fan tokens and security tokens . To more broadly understand the meaning of a non-fungible token (NFT):

• It cannot be represented or replaced by another. Tickets for a Cup final are not fungible as they refer to different seats and bring with them facts and curiosities that make them unique;
• It represents the concepts of exclusivity and absolute scarcity. How many gloves did Michael Jackson wear while moonwalking in 1983? How many original Mona Lisa paintings are there? The response scales the value an NFT can have.

As expected, infungible tokens have become a hit where exclusivity and willingness to pay high are hallmarks of the entertainment, arts, fashion and design markets.

NFTs don’t even have to leave where they are – new owners receive a certificate of authenticity – and can be excellent investments for those who buy and resell and a great source of income for artists, receiving royalties from the resellers .

And all with the speed, modernity and security of a blockchain token !

3 STEPS TO KNOW HOW TO ISSUE YOUR TOKEN

Despite seeming complex due to its cutting-edge technological content, the tokens are simple to create and go through 3 major phases before being offered to the market on the blockchain.

1 – STRUCTURING THE TOKEN

The tokenizing company will assess some important aspects about the asset to be tokenized .

• The market value;
• The cost-benefit ratio of using tokenization ;
• Tax regularity (proof of ownership, tax compliance, etc.).

2 – ISSUANCE OF THE TOKEN

At this stage, the tokenization company will provide the creation of tokens – an asset can be fractionated to facilitate the offer) – and smart contracts , which bring all the rights, duties and penalties.

3 – TOKEN DISTRIBUTION

This step starts with the initial offering of the token on the blockchain, when investors can acquire them. Upon purchase, the holder transfers the tokens to a digital wallet . If you wish and the smart contract provides for it, you can trade them on the secondary market.

As we have seen, using tokens to boost the company’s capital or open new business models will be an increasing reality, bringing agility, security and more profits!

BLOCKBR Digital Assets is a fintech that combines technological innovation and digital knowledge to transform physical assets into digital ones, in the asset tokenization process.

The offer of tokenized physical and financial assets, both current and new, is democratic and decentralized, which makes investing safer, simpler and more efficient.

We enable, structure, issue and offer tokens on our platform and beyond. Be aware that tokens depend on feasibility and regulatory factors.

Do you want to tokenize your business or part of it? Do you have a business solution and does it make sense to issue your own token ?