The History of Tokenization
The advent of blockchains, NFTs, and cryptocurrencies has gained tremendous momentum in recent years leading us to believe that tokenization is the inevitable futuristic monetary technology that the world will take no time to adapt. The concept of tokenization as a form of currency is not new and has existed among humans in history as well.
What is tokenization?
Fundamentally, tokens represent something or carry some value in the monetary ecosystem. Similar to gold and paper money, which represents the conventional financial system, tokens represent the commercial value of the novel decentralized cryptocurrency system.
A tokenized system and tokenization is quite an ancient concept with case studies and examples available in the ancient historical period. Coins, banknotes and casino chips have been excessively used in the past which denotes a legal ownership right of the given currency. These are excellent examples of the physical and historical tokens used as real money, something which comes with monetary value.
When did digital tokenization start?
One of the earliest cases, when digital tokenization was first agreed upon, was in 2001 by TrustCommerce.
TrustCommerce used digital tokenization to protect the information of credit cards. One of their clients, classmates.com, did not wish to store personal and sensitive data of their customers’ credit cards on their server. To deal with the issue, TrustCommerce came up with the concept of digital tokenization and used tokens for referencing transactions in the best interests of classmates.com. This allowed payments to be made in safe and reliable processes without requiring to store payment or cardholder information.
The first-rate solution of TrustCommerce was extremely secure since potential hackers who tried intercepting payment information would only receive an indecipherable string on the encrypted data without any payment information.
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