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Blockchain Might Not Need Tokenisation After All

Written by: Khairul Haqeenm, Journalist, AOPG.

“Cryptocurrency is a bubble, and blockchain tech is way better without them”, is such a blasphemous opinion that it might start a world war within the community.

For years, blockchain has emerged as a game-changer, offering decentralisation and transparency to various industries. Tokenisation, a seemingly inseparable component, has long been viewed as the lifeblood of blockchain applications. Yet, as we peel back the layers of this intricate relationship, we uncover a provocative notion: perhaps the future of blockchain lies beyond the confines of tokenisation.

Tokenisation: Its Purpose and Impact on Blockchain

Tokenisation has long been considered the linchpin of blockchain technology, serving as a key element in ensuring the security and functionality of decentralised networks. But what exactly is tokenisation, and what role does it play in the grand scheme of blockchain?

Tokenisation, at its core, is the process of converting digital or physical assets into tokens, which are then securely stored and managed on a blockchain network. These tokens serve various purposes, such as facilitating secure transactions and representing digital assets like cryptocurrencies, digital art, or property rights.

The primary role of tokens within a blockchain ecosystem is to incentivise network participants and maintain consensus. By rewarding those who contribute computing power or other resources to secure the network, tokens create an environment where network actors are motivated to act in the best interest of the entire ecosystem.

Take Bitcoin, for example. The tokenomics of Bitcoin, or the economic rules governing the creation and distribution of the cryptocurrency, is both simple and ingenious. Miners are rewarded with newly minted Bitcoins for solving complex mathematical problems that validate transactions, while transaction fees provide an additional incentive for miners to participate as block rewards diminish over time.

See here for more on transaction fees.

This elegant model ensures the continued robustness of the Bitcoin network, while also contributing to its value as a cryptocurrency. However, as we delve deeper into the possibilities of blockchain technology, it is essential to question whether tokenisation is an indispensable component or merely an option in the ever-growing world of decentralised networks. As new innovations emerge and the landscape evolves, we may find that tokenisation, though crucial to many existing blockchain applications, is not necessarily a prerequisite for the future of this revolutionary technology.

Token-Free Blockchain Ecosystem

As we continue to unravel the possibilities of blockchain technology, innovative minds have begun to explore the potential of token-free applications. These intriguing examples demonstrate that the fundamental principles of blockchain can be achieved without the need for tokens.

One notable instance is Hyperledger, a permissioned blockchain framework tailored for businesses. Unlike its public counterparts, Hyperledger relies on a predetermined group of participants, granting them access to the network and allowing them to validate transactions. This approach eliminates the need for tokens while still upholding the core tenets of blockchain – decentralisation, immutability, and transparency.

Another groundbreaking example is the InterPlanetary File System (IPFS), a decentralised storage system that aims to revolutionise how data is stored and shared across the internet. IPFS utilises a distributed network to ensure redundancy and resilience, removing the need for token-based incentives. By embracing a token-free model, IPFS focuses on creating a more efficient and secure method of data storage, all while adhering to the foundational principles of blockchain technology.

Both Hyperledger and IPFS showcase the potential for token-free blockchain applications, offering unique benefits in their respective domains. By removing the necessity for tokens, these applications can streamline their operations, reduce complexity, and potentially lower barriers to entry for users and businesses alike.

The Future Beckons: Embracing a Token-Free Blockchain World

As we set our sights on the horizon, we must consider the implications of a blockchain landscape untethered from tokenisation. The potential for innovation and growth in this token-free realm is vast, with myriad applications awaiting discovery and refinement.

For businesses, the allure of token-free blockchain solutions lies in their ability to streamline operations, reduce complexity, and enhance security. By shedding the constraints of tokenisation, companies can tailor their blockchain networks to better suit their specific needs and requirements. This flexibility opens up a world of opportunity, enabling businesses to explore diverse use cases, from supply chain management to secure data storage, all while maintaining the core principles of blockchain.

Governments, too, stand to benefit from the adoption of token-free blockchain solutions. With increased transparency and immutability, governments can foster trust and accountability, both internally and among their constituents. Token-free blockchain applications can enhance the efficiency and security of public services, from voting systems to land registry management. By embracing these innovative technologies, governments can drive progress and help shape a more equitable and connected society.

Lastly, individuals stand to gain from the proliferation of token-free blockchain applications. As these solutions become more widespread and accessible, they have the potential to empower users with increased control over their data, digital assets, and online identities. By reducing the reliance on centralised authorities, token-free blockchain networks can help promote a more equitable digital landscape, where individual privacy and autonomy are respected and protected.

As we embark on this journey into the future of blockchain, it is crucial to recognise the potential of token-free applications and the opportunities they present. By embracing this new frontier, we can continue to push the boundaries of what blockchain technology can achieve, driving innovation and fostering a brighter, more interconnected world.

Khairul Haqeem

Khairul is proficient in writing tech-related pieces for the Asia-Pacific region. Some of his most notable work is focused on emerging technologies, data storage, and cybersecurity. His prior experience includes stints as a writer for two iSaham sites: Crepetoast.com and Solanakit.com. Before beginning his writing career, he worked in the field of education. Aside from studying engineering at the International Islamic University Malaysia, he has also worked as a subtitler for Iyuno Global, serving clients like Netflix. His specialities are: • Disruptive Tech. • Data Storage. • Cybersecurity. • Decentralised Tech. • Blockchains.

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