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What are the advantages of tokenization of a network?

Tokens are vouchers that you can exchange for a service or good. They have value because you can spend them on something that you think is valuable. 

There are mainly 3 types of tokens:

Utility tokens, equity tokens and payment tokens.

Utility token: This type of token gives you the right to get a certain service or buy goods. For example Cindicator, when you own a certain amount of their tokens you get access to their trading forecasting service. Or Travala is another example, you can order a holiday on their booking website with the ava tokens. 

Equity token: This is a token that is backed by real equity so it's like a normal stock but instead registered on the blockchain. Equity tokens can give you normal voting rights over a company or pay a dividend. 

Payment tokens: This is the type of tokens most people are familiar with. You can use them to make payment. Some examples are bitcoin, litecoin, ripple, monero, ... Which are all payment tokens that should resemble a certain value.

An utility token is not very different from let's say a voucher you would get at macdonalds for a free meal. The difference is that it's stored on the blockchain. So to answer your question, the advantages of this type of tokenization are:

  • Full transparency, the data is accessible for everyone.
  • Unless it's a private blockchain the system is open for everyone, there are no restrictions. 
  • High security because of the decentralisation. No single entity is controlling the blockchain. 
  • No fraud can be taking place since you can't change the blockchain on your own. (Unless you have enough mining power to take over 51% of the network.)


First of all, the unique and random criterion of a tokenization is very interesting: it prevents any attacker from detokenizing and finding the original data from the token without having the corresponding lookup tables. These are actually the equivalent of a "super-powerful" cryptographic key in a standard encryption system. So the security level of a tokenization is very high. Of course, this is only valid when the lookup tables are stored in a protected manner. Also, the data, even tokenized, are usable "as-is". it is therefore possible to make SEARCH and SORT in a tokenized database. One of the only negatives is the size of the lookup tables, which can be very big if we use the wrong method of tokenization. So the place of storage of the tables must be thought according to that.

Tokenization is already used in many areas where security is paramount. The most common is the banking community. For example, tokenization is often used to protect stored data, as required by the Payment Card Industry Data Security Standard (PCI DSS). Another example: in March 2014, EMVCo (consortium of major banking firms such as Europay Mastercard Visa) has published a method of tokenization for EMV payments. Tokenization can also be found in medical data systems, or for criminal records.

In the end, it is a very interesting technology, which is only in its infancy in terms of practical deployment, but which promises to be a small revolution in data protection.


@Elva1999, Tokenization is amazing model and if Tokenization Network gets launched then in my opinion anyone can create and launch their own Tokens and just imagine, different communities can come forward with their own use cases and by creating tokens they can produce use case in that community by accepting it as Medium Of Exchange and can grow. In my opinion if launched then it will going to produce vast opportunities. 👍