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How Does Digital Tokens Benefit your Business?

Web3 is bringing a wide range of innovations to businesses around the world. It can help you raise funds, increase your value, and become liquid. The term “digital token” was used to refer to any intangible item that has value and had been computerized. This could be a song, a piece of digital art, contracts, or cryptocurrency.

However, this understanding changed by the day: The mere mention of a token implies that its value of the token is appreciated. The lexical term “digital tokens” no longer refers to computerized files but is now used in the context of blockchain and decentralized finance.

The term “digital token” can refer to assets on the blockchain. These assets could be stock of a company, ownership rights, or tangible assets like real estate. This method of conserving assets has many benefits, including ease in management, liquidity, and the possibility to attract small investors. Continue reading to learn more about these benefits and how you can use them in your business.

What is a digital token? How do they work?

A digital token is any asset that exists on the blockchain. An NFT can contain a piece of digital art, a security token representing an organization’s share, a utility token within a specific company’s ecosystem, a stablecoin, CBDC, and all other types of tokens. Tokenization can create a digital token that can trade, allowing for the expansion of digital token markets.

A digital token is most often an intangible (patents and trademarks, copyrights), or tangible (that can be used in real life, such as a piece or oil barrel, property ownership, security, etc.). Tokenization is the process of transferring such assets to the blockchain.

How can you make physical assets digital?

Digital tokens can now be purchased by financial services companies, which opens up new investment opportunities in this rapidly growing field. digital tokens, which are its main product, can be used to grow the business and make it more profitable and easily recognizable. Tokenization can bring life to assets with low liquidity such as stock, real estate, and precious collectibles. These assets, along with commodities are often transferred to the Blockchain. These physical assets can be made digital via two methods: NFT and security token.

The security token is real securities, such as shares in the company, collectibles, or real estate ownership. Security tokens are usually created to hold corporate equity or securities. They can also be used to transfer commodities and valuables to the blockchain. Security tokens, which are basically blockchain-based representations for physical assets that are backed by them, are simply described as security tokens.

Non-fungible token (NFT): A collectible token that is not interchangeable or duplicated of another standard. This function makes it a popular medium for digital art. This token is non-fungible and contains information about the object’s owner. If a token’s duplicate is made, the information about copying the token will also be kept in the code. The second token will be a fake, so the chances of it being sold at its original price are slim. These NFTs properties encourage its use as proof of authenticity, and in the tracking zone: for example if attached as a certificate for medication, or as a ticket to an event.

Benefits of Digital Tokens

There are many types of digital token services that are most popular. Let’s begin with tokenized securities.

The stock tokenization of a company is principally associated with the security token offer (STO). This is a blockchain-based version of an ICO. A company can still run it without becoming public. STO is cheaper and more efficient than an initial public offering.

An STO can bring many benefits to the company, investors, and the overall financial market. It allows the company to trade its shares, making them liquid. It is possible to issue tokenized securities and manage them on platforms such as Errna. You can also swap for other digital securities using its platform.

The tokenizing of the stock gives the issuing company more rights, as it retains its bargaining power when selling the token. This is possible because the token can be sold not only to one large investor who held the negotiating power but also to a wider range of smaller investors. Investors will have extended investment options, simplified exits, and a lower investment threshold due to fractional ownership.

Let’s take a look at some examples of digital tokens that have been implemented in different sectors.

Tokenized Luxury Villas

Organizing a security token offering to create tokens that were real-estate-backed and would be available to investors. The tokens can be purchased by investors and they will earn a return on the sale or rental of villas. Tokenization made it possible to quickly raise funds and was much more efficient than traditional financial systems (e.g. going for an IPO).

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Tokenizing real property is more profitable than monetizing it via REITs or looking for one buyer. Real estate is more liquid thanks to fractional ownership and easier to trade with decentralized finance.

Farmland tokenization

The first to reap the benefits of decentralized finance are the natural resources sector and agriculture. These spheres have had to deal with high-cost equipment, risky research, and long waiting periods for a return on their investment. They are now more familiar with the advantages of tokenization and digital tokens. A business can set two goals for its security token offering. Expand the business by purchasing additional agricultural land at competitive prices and establishing farm operations on the most productive farmland in the world.

NFT Sneakers

Sneakers are a way to download an app, buy an NFT and move within the app. The app’s dynamic rewards users with crypto for moving. This is how Web3 lifestyle apps work. The business can strive to use technology in thoughtful ways in order to achieve the goal by allowing the brand to promote itself and set a progressive image.

More companies, even those not related to blockchain, are now leveraging digital tokens’ power. Decentralized finance offers fantastic ways to raise funds and manage the assets of businesses.

Conclusion

Errna is the best cryptocurrency & Blockchain Consulting Company that provides decentralized blockchain applications for your own business. Our experts are well experienced and proficient in creating customized blockchain-based applications. Errna’s digital tokens enable you to transfer your real-world assets digitally. There are two reliable ways to transfer the deploying digital tokens for your real-world asset transactions – Ethereum Tokens and Colored Coins.

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