On their own they are worthless so they need to be backed or exchangeable with other valuable things. Token: This is could be a tangible or virtual object that is used as reinforcers. The re-inforcers are symbols or token that can be exchanged for other re-inforcers.įor a token economy to work, it needs these basic requirements aside others Understanding the Token Economy and Blockchain tokenization for B2B Trade FinanceĪccording to Wikipedia, a token economy is a system of contingency management based on the systematic reinforcement of target behavior. With the attendant risk of non-payment, tampering of goods, currency fluctuation, doing trade especially internationally has been made financing a bit safe via Trade Finance which shows because it is backed by strong collateral and documented credit operations. It added that “about a third of global trade is supported by one or more bank intermediated trade finance products”, and that “he remainder was financed by inter firm trade credit” (non-bank-intermediated) However, it found that the market for trade finance, considered in its widest definition, is very large - certainly well above US$ 12 trillion annually out of US$18 trillion of exports (or imports).1 For bank intermediated short-term trade finance, the BIS determined that “a flow of some US$ 6.5–8 trillion (…) was provided during 2011, of which around US$ 2.8 trillion was L/Cs ”. The Bank of International Settlements (BIS) has noted that there is no single, comprehensive source of statistics allowing for an evaluation of the exact composition and size of trade finance markets (BIS, 2014b). Statistics from World Trade Organization B2B Trade finance market via Banks and its Challenges One of such industry that is fast catching up to its adoption is the Supply-Chain industry which needs tokenization to serve its Trade finance process for Business-to-Business supply-chain sector. This has also given rise to federated/private blockchain now referred to as DLT (Distributed Ledger Technology) due to the shortcomings of public Blockchains which makes it anti for business adoption.
Blockchain and its offshoot Cryptocurrency, is no longer news to the world of business especially as awareness and adoption of the technology keeps growing and penetrating different industries and economies, thereby creating a paradigm shift from legacy and de facto systems in business processes.
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