Tokenization and digital money: the economy of the future

In recent years, in addition to electronic money in our accounts that have existed for decades, there have been new pretenders to the throne - digital money produced by so-called tokenization.

What is tokenization

Tokenization is the process of exchanging our sensitive data for a number generated by an algorithm, i.e., a token. For example, tokenization prevents misuse and fraud with credit card information. During bank card tokenization, the card data is replaced with a randomly generated sequence of numbers called a "token." These tokens can be transmitted over the Internet or any Wi-Fi network necessary to process the payment without revealing our card data.

While tokenization refers to data in the traditional financial sense, blockchain tokenization focuses on assets. For blockchains, tokenization involves the creation of cryptographic device tokens that represent both physical and digital media.

Central bank digital money is inevitable

Both Bitcoin and data on central bank digital money projects from various countries have again attracted significant attention in recent months, and the results of the policy consultation are expected to have a much greater impact on the world of money.

Central banks around the world are tasked with exploring the potential of digital funds promoted nationally, along the lines of Facebook's Libra payment system. Obviously, a digital payment system has a lot of advantages: it is easy to handle, and it avoids the costs and expenses of paperwork. And some countries are obviously making progress in this direction.

China in the vanguard

Currently, China is far ahead of its "competitors" in the development of CBDC, and a number of comprehensive pilot tests have already been conducted. Given the country's readiness to become a cashless society, experts expect China's central bank to rapidly adopt digital money over the next five years compared to other CBDCs.

Some enthusiasts speculate that the rapid launch of the digital yuan is the reason for such a tough policy towards other digital assets. Meanwhile, the digital euro is also under development; similarly, a digital dollar project is on the table of U.S. policymakers. Even Russia and Ukraine are talking about creating their own cryptocurrencies.

The increased interest in cryptocurrencies such as Bitcoin and Ethereum also catalyzes the spread of digital currency. Their market value has risen sharply recently, with the total value of cryptocurrencies approaching $2 trillion. While in the past end-users usually stimulated the active spread of cryptocurrencies on their own, today both institutional investors and entire corporations have emerged in the digital asset market. Presumably, this is how the government is trying to get rid of competitors.

It is worth noting that cryptocurrencies are still generally viewed as a volatile digital asset rather than a transaction currency.
New payment solutions could radically change the already crowded electronic payment industry. At the same time, cryptocurrency trading and storage could become a new source of revenue for financial institutions, and CBDCs could lead to more effective and targeted monetary and fiscal policies.

And while we enjoy autonomous digital assets, you can buy cryptocurrency from our exchanger.