On the eve of the third phase of tokenization, tokens show themselves in a new light – BeinCrypto.com

Tokens: Next-generation tokens have potential to be as transformative as HTML, says weiwu zhangthe founder of Smart Token Labs.

Due to the excessive craze for speculative trading of currencies (fungible tokens) and digital collectibles (non-fungible tokens), tokenization has been misunderstood and repeatedly criticized.

As we enter a new market phase, the hype around altcoins and NFTs is fading. As a result, projects are beginning to focus on the true potential of Web3, ie a more inclusive web with a vastly improved user experience. Not to mention, the creation of entirely new and open markets (much like we have with the advent of mobile Internet).

Only in this context can we fully grasp the true potential of tokenization. (and tokens). But first, we need to recognize that tokens represent much more than property rights for trading and speculation.

Indeed, tokens are a whole new class of digital assets. It is a connection layer between blockchain, smart contracts, users and services. This connection layer can serve multiple purposes and create a bridge between Web2 and Web3.

This new layer of tokens, which is provided by TokenScript, has the potential to be as transformative as HTML. It also triggers the third wave of tokenization.

The third wave of tokenization

Over the past few years, the concept of tokenization has gone through two waves.

During the first wave, tokens were considered currencies for trading and speculation. At first, users started trying them out, then after a series of ups and downs, they gained value. Although these assets could serve many purposes, people mainly used them for trading and speculation.

The second wave was marked by speculation on non-fungible tokens, which had some utility. Initially, people did not trust tokens ERC-721. But a few years later, NFTs of art and profile pictures have seen unprecedented success. Again, non-fungible tokens have much more to offer in terms of utility and use cases. But trading and speculation dominated the market and captured the full attention of users and creators.

Tokens: the third wave

The third wave is upon us. We believe it will be defined by smart tokens with a programmable interface, which will offer connectable, composable and actionable rights.

In effect, smart tokens will act as a bridge and connecting layer between user rights and permissions on the Web3 (which encompasses blockchain, smart contracts, user representatives and services). Moreover, the role of these assets will be redefined and transformed between Web2 and Web3. Ultimately, they will bring us closer to the promise of a “frictionless marketplace” and a more inclusive web.

Smart tokens fulfill the promises of Web3

To illustrate how tokenization can give us new fluid markets and an inclusive web, let’s take the example of car ownership.

At its core, the concept of tokenizing the ownership of a car is to tokenize its ownership rights. Who has the right to control the car? The right to drive it, register it or insure it? The right to lend or rent it or give access to it?

All of these rights, including ownership and insurance, exist today. But, they involve interactions between the car owner and service providers that are far from transparent. Secondary rental market rights are also there, but they are complex.

With tokenization, we create a token that functions as a trust anchor (public key) on the blockchain. As a programmable smart token, it can encompass all of the aforementioned rights. And who says programmable interface, says that the token can interact with any Web2 or Web3 site or service. Therefore, it can protect all the rights of the owners without depending on the trust or the authorization of any third party.

Tokens: use cases

We at Smart Token Labs have been working on these use cases for four years, while developing TokenScript as a framework for smart tokens. We created car ownership tokens for Karma Automotive. These represent rights to registration, insurance and rental services, with the possibility of expressing these rights and authorizations directly on Web2 sites and services.

In this next wave of tokenization, the internet will be a mixture of Web2 and Web3. Indeed, smart tokens and cryptographic technologies are currently being used to create an unprecedented level of integration.

We will also see a new generation of innovative companies emerging at the intersection of Web2 and Web3. The next Uber, Airbnb and YouTube will rely on programmable smart tokens.

What about dApps?

Lately, it has become apparent that dApps cannot deliver the user experience needed for mass adoption of Web3. Indeed, despite the good intentions of their creators, dApps ended up reproducing the closed model of Web2 rather than offering the freedom promised by Web3.

Composable, mobile and interoperable smart tokens with unlimited logic and functions will lead to new open markets and a more inclusive web. We believe that the third wave will finally allow us to achieve this goal and that tokenization will no longer be a hated word.

About the Author

weiwu zhang is the founder and technical director of Smart Token Labs, a company that aims to create a tokenized future through smart token bridges. Weiwu has over 9 years of experience in blockchain, creating altcoins, and developing trading algorithms. Previously, Weiwu was a blockchain engineer for Commonwealth Bank of Australia – Australia’s largest financial institution.

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On the eve of the third phase of tokenization, tokens show themselves in a new light – BeinCrypto.com


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