With Web3 poised to transform the internet with its potential to decentralise away from a select group of large corporations, understanding how the landscape may change in the future is key.
Web3 and tokenisation
Tokenisation is a term which refers to the process of digitising assets to make them more accessible. Tokenisation currently already plays an important role within the payments process, as it’s used as an essential cybersecurity tool which obfuscates the payment identity and makes it much more difficult for fraud to occur.
How does it work?
Essentially, tokenisation works by issuing an anonymous, unique and fully digital representation of something real. This could be anything from art to property, financial assets, and even identity data.
It’s underpinned by blockchain technology, which provides a secure and transparent ledger for accurate ownership records.
What are the benefits of tokenisation?
Tokenisation has a whole host of benefits, including supporting more efficient financial transaction settlements, as it’s something that can work 24 hours a day. It also presents cost savings, as it can be automated and reduces the need for as much human input.
Partnering with FCA compliance consultants will help you to ensure you’re getting the most value from tokenisation and mitigating the risks.
What are the risks of tokenisation?
The legal and regulatory structures around tokenisation are still evolving, which means that working with FCA compliance consultants on an ongoing basis is likely to be important.
There are also data security measures that will need to be considered, as well as potential market volatility issues to contend with.