Tokenization is a way of representing assets in the form of tokens. For example, Mike owns a chain of men's hair salons. A haircut at his salon costs $100 and a shave costs $50. He converts these services into tokens. Thus, one token on his site costs $50 Consequently, a shave will cost one token and a haircut will cost two.

If we consider the example with goods, the principle is the same. Megan makes handmade bracelets. The cost for each bracelet, regardless of design, comes out about the same, as does the price - $50 . In the electronic system, she creates digital commitments to make the bracelets and presents them as tokens, which cost $50 each . Megan has a good reputation with retail and wholesale customers, so she can sell tokens to shoppers.

This conversion increases the speed of selling goods and services, is secure thanks to blockchain, and also expands opportunities and adds convenience. Although to the untrained person at first the process will seem unnecessarily complicated, tokenization will make collaboration much easier as a result. This is especially true for large production and large companies.

However, there are a few disadvantages to tokenization as well. For example, users can lose access keys or they can be stolen by hackers, making it impossible to gain access to assets. Also, anonymity in public blockchains is almost impossible.

The difference between a token and a cryptocurrency

Tokens can be managed by a single entity (centralized) or by an algorithm (decentralized). The price of a token can be tied to products or services, rather than formed solely on the basis of supply and demand.

Buying, selling and storing

There are several ways to buy and sell such non-standard currency:

At a currency exchange;

In an electronic currency exchanger;

By personal agreement between the buyer and the seller.

Tokens are bought and sold according to the same principles as all cryptocurrencies. Tokens are stored in wallets, including multicurrency wallets, in the form of smartphone applications, computer programs or even browser extensions.

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