The Tokenization Revolution is Here: Exploring Enterprise Adoption
By Rob Viglione
Amid all the disruptions this decade has handed us, it's evident blockchain technology is here to stay. With its potential to transform many industries, it's no wonder that enterprises are taking notice of blockchain's potential and exploring ways to adopt this innovative technology. One such way is through tokenization, which offers many benefits for enterprises.
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 through tokenization, as tokens are stored on a decentralized ledger that is extremely difficult to hack.
Transactions made using tokens are also transparent, meaning that all parties involved can see what has happened at each stage of the transaction. Additionally, tokens cannot be altered or tampered with once they have been created. This ensures complete immutability.
All these factors make tokenization an attractive option for enterprises looking to adopt blockchain technology. By tokenizing assets, enterprises can enjoy increased security, transparency and immutability – all of which are essential in today's evolving, fast-paced business world.
With its many advantages, tokenization is ripe for enterprise adoption and some frontrunners are already making headway in making it part of the business ecosystem.
Goldman Sachs is one of the big names in financial services that is taking notice of tokenization. Namely, the investment bank is exploring the use of non-fungible tokens (NFTs) for tokenizing real-world portfolio assets. This is an exciting development, as it shows even traditional enterprises are recognizing the potential of blockchain technology and exploring ways to harness its power.
Goldman Sachs’ interest in tokenization is likely to continue for years to come, 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 promoting enterprise adoption of blockchain technology.
Unilever and SAP
Unilever and SAP are now teaming up to explore enterprise adoption of tokenization, with a focus on supply chains. Legacy supply chains are often opaque, making it difficult to track the journey of a product from start to finish. This can lead to a number of issues, 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 actors within the supply chain, as well as customers, to better see the materials and processes behind a product.
SWIFT: Clearstream, Northern Trust and SETL
Another example of enterprises exploring the use of tokenization is a pilot program conducted by SWIFT. The global provider of secure financial messaging services is exploring interoperability in the asset tokenization market. This pilot was conducted with Clearstream, Northern Trust and SETL, a blockchain company backed by Citi.
With its network of over 11,000 institutions in 200 countries, SWIFT is uniquely positioned to engage with 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 enterprise exploring the application of tokenization. In October 2021, Adobe launched its content attribution feature, which lets creators export their images directly to certain NFT exchanges. This service lets artists protect their work against fraudulent claims by irrefutably proving their provenance before minting them as NFTs.
With its expansive network of Creative Cloud subscribers, Adobe has the potential to significantly 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, boasting more than $5.6 trillion in assets. The bank also has 40 blockchain applications that last year handled a total of more than $48 billion worth of transactions.
As part of the company’s tokenization initiative, carbon credits issued by the transit commission as non-fungible tokens can be redeemed for China’s new central-bank digital currency. This system is already being used in the city of Qingdao, where it has removed 99,000 kilograms of carbon. The program is set to expand to other cities in China, which will help increase the adoption of NFTs.
Kakao, the company behind South Korea’s dominant mobile messenger app KakaoTalk, has also entered the NFT space. In May 2021, Kakao launched KrafterSpace, an NFT marketplace integrated with OpenSea.
Users can buy tokenized artwork directly through KakaoTalk with Klip Drops, the platform’s accompanying digital wallet. With its large user base and integration with OpenSea, Kakao is well-positioned to increase the adoption of NFTs by enterprises.
Nornickel, the world’s largest producer of palladium and refined nickel, has issued $1.3 billion worth of tokenized contracts for its precious and base metals. These contracts are stored on the Atomyze blockchain and can help industrial firms track the origin and environmental integrity of their metals.
Enterprise adoption of tokenization is on the rise
As we can see, there are a number of enterprises exploring the use of tokenization. From traditional institutions like Goldman Sachs to tech giants like Adobe, businesses are recognizing the potential of tokenization and its benefits for enterprise adoption of blockchain technology.
The barrier between tokenization and the masses is also being broken. New options are emerging to help widen the accessibility of tokenization, including recently launched Horizen’s TokenMint. This automated drag-and-drop platform allows anyone, with or without programming knowledge, to create their own token with customized tokenomics.
With its ability to increase security, transparency and immutability, tokenization is a powerful tool that can be used by enterprises to streamline their operations and create more trust with customers, investors and employees. Those who adopt tokenization will enjoy the advantages 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 lead of the public blockchain Horizen, as well as the co-founder and CEO of Horizen Labs. He holds a Ph.D. in Finance, an MBA in Finance and Marketing, and a Bachelor's in Physics & Applied Mathematics. Previously he has been an advisor to Aave, HeroEngine, and worked as a software project manager for the U.S. 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.