To stay relevant and competitive, traditional businesses are constantly seeking ways to reach and serve customers, as well as attain a certain level of efficiency.
For such businesses, information on cryptocurrency and of course, blockchain can be exceptionally helpful.
Before we get into the “how” of using tokenization to grow traditional businesses, let’s first understand the concept.
A token, simply put, is a representation of an asset. The word “tokenize” refers to the substitution or turning of one thing into another. Tokenization therefore, points to the process in which ownership rights of something of value (a physical or non-physical asset) are transformed into digital tokens usable on a blockchain application.
Tokenization allows stakeholders in a business to transfer ownership of their assets as tokens. Due to better accessibility, investors can invest seamlessly in such assets, and can conveniently buy bits of expensive and large tokenized assets.
Having understood that, how then can tokenization help grow your business?
One indispensable driver of business growth is funding. Businesses looking to take things to the next level mostly need funds that will enable them to execute their business plan.
Normally, traditional businesses seeking growth may turn to familiar sources of funding such as traditional bank loans, crowdfunding sites, lenders, etc. and these sources have their own limitations.
However, tokenization provides a unique opportunity. Here, business owners can raise the funds they need for growth on the blockchain technology through token offerings that are made available on exchanges where they trade freely. The investor’s location does not affect access to the market where such assets trade, and investment is also simpler because there is less minimum capital requirement.
This means that the business can access more investors who can conveniently buy into the company’s offering and receive new blockchain-based tokens. Such tokens may simply represent a stake in the business or project or may have utility in the company’s product or service.
Interestingly also, because tokenized assets are easier to trade more than their traditional counterparts, they are more attractive to investors. With blockchain technology, business owners can tokenize a wide range of assets including real estate, corporate equity, financial instruments, etc.
Aside helping traditional businesses raise capital, tokenization also serves as a means of conducting transactions and ensuring operational efficiency. In tokenization, streamlining of IT systems and infrastructure sharing among players is facilitated without a central third party. This translates into a considerable reduction in transaction costs.
Additionally, businesses can find ideas to optimize and expand their operations when they interact with blockchain technology. This may include finding new prospects such as multiple partners, or introduction of new business models.
As more businesses continue to learn about this concept, tokenization has become even more popular. This is all thanks to its wider inclusion of investors on the blockchain technology, and enabling operational efficiency in trades and transactions.
Now, businesses of all sizes can key into this viable capital-raising alternative for growth. It goes to say that businesses that intend to grow and compete in today’s market must consider incorporating elements of blockchain technology into their business plan.