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You may hear about the term Tokenism or Token Economy or Tokenization. Why are we into tokens and how does crypto May likely change the economy into?
What is a token?
The token is a virtual currency to represent a LEDGER entry as a unit of value. An electrical record to keep track of the worth of assets.
Difference between cryptocurrency and token
Cryptocurrency is a layer 1 protocol that facilitates peer-to-peer blockchain networks. It not only kept a public ledger but also verified each transaction through mining efforts. Token runs on layer 2 through platforms like Ethereum to help the verification process but get its own ledger.
What is Tokenism?
It is an idea that came up in the 1970s by a British economist named Friedrich August von Hayek. His idea was to have some sort of network like a cash register or slot machines with an electronic form of cash to sort out and require a ‘signature’ to prevent forgery.
Tokenism creates casino
The idea of Tokenism was to dethrone the power of the gold-backed fiat currency system. But fiat currency then detached its valuation from the gold completely and the government had the absolute power to print more money.
Tokenism gave birth to casinos in which they invest their own money as a chip to let people gamble under their “money system” without ever losing the real money (real value).
Tokenism to Token Economy
Bitcoin was born in 2009 and followed by Ethereum in 2015. Ethereum, in some sense, is a better version of Bitcoin because it has smart contract functionality similar to check. It enables the creation of virtual currencies on top of the blockchain. You also have an internet that connects globally. The network system is ready. Cryptocurrency also prevents forgery through asymmetrical cryptography technology. Tokenism is ready to operate.
Token Economy
The token economy is to make any real asset into a token. It means you can fragment your assets and do whatever you want digitally. Similar to stock when the company issues to raise funds while investors can buy and hope price increases to make profits. Individuals can issue tokens and sell them to others who believe their value in the future will rise.
Tokenization
You can token anything from attention to advertisements, social media likes, or game scores.
Many decentralized social media adopt ideas to tokenize ??.
You too can come up with ideas to tokenize. For example, your article or your art through NFT.
Future scenarios (speculated)
Token commodities
A decentralized system may provide a way to de-commodities the current economic system in which people keep buying cheap goods.
Token commodities may help manufacturing companies to provide the best and longest durable goods to preserve value measures by the token.
Money without the money
Token May replace the money system we have in the token market. Everyone can issue their tokens and the valuation depends on how influential it is on the social media platform.
Centralized money
CBDC May dominate the money system in the future to monitor each transaction. Token may be a fraction of the economy only for gamers and some art collectors to preserve assets valuation.
In conclusion
We are evolving from the idea of Tokenism to Token Economy to Tokenization. Token has changed what valuation we used to measure and the excitement of the future is yet to come. What do you think of the future?!
Photo by Michael Dziedzic on UnsplashRelated articles:
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-------------------------------------------------------------------------------------Disclosure: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose cryptocurrencies are mentioned in this article. This information is only for educational
