According to William Mougayar, author of the book The business blockchain, a token is “a unit of value that an organization creates to govern its business model and empower its users to interact with its products while facilitating the distribution and sharing of benefits among all its shareholders.”.
Thus, as BBVA analysts point out, a token is a unit of value issued by a private entity. In this sense, they explain, “it is similar to cryptocurrencies (it has a value accepted by a community and relies on blockchain technology), but, at the same time, it is a broader concept since it has more uses than that of a simple currency.”.
Within a private network, one can use a token to grant a right, to pay for a job, or as a gateway to extra services. In this way, “a token is used for whatever the designer and developer, person or organization, decides. The ‘tokens’ admit several layers of value inside them. For this reason, the designer decides what a specific ‘token’ has inside,” says Cristina Carrascosa, a lawyer and blockchain expert.
Carrascosa acknowledges that the ‘tokenization’ of the economy is still at an early stage. “Not only is it a problem of lack of international regulation, but also converting rights into purely digital assets implies a higher level of complexity for non-technologist users. But these are pitfalls that are avoidable over time.”
On the other hand, the experts at Fellow Funders stress that tokenization has a major advantage: exchanging sensitive data, such as payment cards or bank account numbers, in a format with no intrinsic value. “Relevant data (which is then stored in a secure data vault in the cloud) is eliminated for an undecipherable token,” they argue.
These managers also point out that tokens help to modernize traditional loyalty systems, such as the cards we use in stores and services to accumulate points.
Brands need to build loyalty and get to know their customers better in an environment where commercial competition increases and consumer loyalty decreases. “The entry of blockchain technology presents a great opportunity for brand building through ‘tokenization,'” the previous analysts explain.
“With the introduction of a tokenization-based loyalty system, several rewards can be offered to suit customer tastes and preferences in a secure and fraud-proof environment,” they add.
Movistar has been one of the latest brands to join the tokenization trend. The operator rewards its customers with free channels or movies in exchange for performing different actions, such as activating the free Secure Connection service. These tokens have no expiration date and accumulate in their mobile application.
But there are many examples of loyalty through tokens. One of the most popular is in the world of soccer. More and more teams are launching so-called ‘fan tokens’, collectible digital assets that allow fans to access a wide range of benefits, such as participating in certain decisions, obtaining discounts and exclusive promotions, or winning VIP experiences.
Source: Bolsamanía
