The unofficial currencies of blockchain could someday become the world’s currency
As blockchain transactions begin to take hold in the general economy and the supply chain in particular, there is a growing question of how to speed financial transactions. According to Coin Telegraph, the answer may be tokens.
Making tokens, which are digital currency such as Bitcoin or Ethereum, available for payments could speed payment processes. Tokens are not yet recognized as official currency, but their time may be coming quickly.
Coin Telegraph mentioned Ethereum has become the token of choice used by some freight forwarders and other businesses involved in the shipping industry. With most industries taking their business, literally and figuratively, online, the e-commerce platform may have found its unofficial currency.
Tokens are also called app coins, adding credence to their reputation as digital currency used in demand-intensive industries such as the freight forwarding industry. As tokens are “fast and liquid,” transactions are conducted faster as long as you have a device connected to the internet.
Transparency of token-based transactions sometimes sounds like a contradiction. Coin Telegraph noted how these transactions are conducted while “keeping the identity of the entities involved as anonymous as possible.” The consistent aspect of the transaction though involves having them recorded in the blockchain for documentation and safe-keeping. As for the “anonymous” description, that applies to the account holder’s secure information.
Donna Dillenberger, an IBM fellow, managed to explain the blockchain part of the logistics transaction involved. Delivering parts from the supplier to the importer involved a series of approvals conducted through the blockchain from the customs authority to the Port Authority to the importing party. Once the parts have been officially delivered, money is wired to the exporter’s bank account using the blockchain.
Without the blockchain, freight deliveries will involve several documents subject to approval by various agencies. Taking everything online through the blockchain speeds up the process. The supplier/exporter is informed that the shipment has been approved by the customs authority and the Port Authority and finally delivered to the importer/recipient. And the importer/recipient receives the shipment quick enough to process payment. The demo used dollars.
Since the blockchain has recorded transactions and payments, its developers eventually found a way to have its own unofficial currency to use. Instead of importers and exporters using their respective currencies, they will be using tokens. It then makes assets exchanged in this model “tokenized assets.”
The tokens that are then used to pay completed transactions are called utility tokens. Instead of wiring money, payment is processed through wired utility tokens. This kind of transaction is explained further by Coin Telegraph as being used for staking mechanisms. In other words, the value of the token traded is based on “network effects” or how many times it is traded along with how many traders are at stake with the token.
As of this writing, the transition to an economy using digital currency like tokens is still in its infancy. While comparable to the so-called internet boom before the turn of the millennium, the unpredictability of the market serves as a way to keep watch of the latest developments involving blockchain-based tokens. Only a handful of online traders have mastered the art of token-based transactions and blockchain is only beginning to be understood by trucking. But there is no stopping the e-commerce revolution. With a stateless tool such as the internet, it will eventually involve using a stateless currency. Soon, the term “token” will override the usage of the word “Bitcoin.”