The potential of tokens on blockchain is big. Really big. The world has already seen the enormous value that’s unlocked when you can digitize cars (Uber, Lyft), homes (Airbnb), freelance work (Handy), and many others.
Imagine if you could digitize value?
We can start to make transactions instant. We can move beyond payment versus payment to ensuring delivery versus payment where the tokenized asset being bought gets delivered only if the payment goes through. We create markets for as-yet unthought of products and make them available globally. Tickets, mortgages, stocks, bonds, loyalty points all have untapped potential that can be unlocked by tokens.
But the potential of tokens isn’t here yet. We need standards. We need a common language to describe what a token is, how it works, and what it represents. Standards have been at the foundation of how most innovative infrastructure is able to scale. Standards we take for granted today in technology, such as those underpinning the internet like HTTPS, are the most recent incarnation. Go back in history and we see the same power of standards like the adoption of common train track widths in North America during the late 1800s, in the metric system in Europe during the early 1800s, and — if we go back even further — of time with the invention of the pendulum clock in the 1600s. Each of these unlocked untapped value because people were able to coordinate in ways they couldn’t before.
The Enterprise Ethereum Alliance (EEA) today announced the formation of the blockchain-neutral Token Taxonomy Initiative to address the need to universally define tokens to better understand how their use and implementation can occur interchangeably across all token-enabled blockchain platforms. While some form of tokens and tokenization have existed throughout time, blockchain-derived tokens have the potential to transform business models for goods and services offered by distributed or decentralized applications — even if they are built on top of different blockchains. The purpose of this initiative is to clearly define a token in non-technical and cross-industry terms using real-world, everyday analogies so that anyone can understand them.
Key to this initiative is that its blockchain-neutral. Token use should be able to happen across blockchain platforms. We can imagine someone purchasing a plane ticket token on one blockchain platform using a digital currency token on another blockchain platform. If we want to take full advantage of what blockchain has to offer, these two transactions have to be able to communicate with one another. Standards are where that starts.
The group’s mission will be to develop a clear definition and scope of the token concept, including use cases, taxonomy and terminology, and a specification. Marley Gray, EEA Board Member and Principal Architect, Microsoft, will be the Token Taxonomy Initiative Chair. Members of the initiative include Accenture, Banco Santander, Blockchain Research Institute, BNY Mellon, Clearmatics, ConsenSys, Digital Asset, EY, IBM, ING, Intel, J.P. Morgan, Komgo, Microsoft, R3, Web3 Labs, among others.
Standards only work if there is widespread adoption. IBM is joining alongside many industry players to help establish this common framework.
The Token Taxonomy Initiative will lay the important groundwork, based on real-world customer use cases and requirements, working to create a common set of tokens and control capabilities including:
Educate by clearly defining a token in non-technical and cross-industry terms.
Establish a common set of terms and definitions for use by business and technical participants.
Create a Token Classification Hierarchy (TCH) that is simple to understand and navigate.
Define meta-data using the EEA Token Taxonomy Initiative syntax to be able to generate visual representations, such as a token hierarchy or token design in tools that understand the taxonomy.
There is a lot of work still to be done and we all benefit from open standards. Gari Singh, IBM Blockchain CTO, along with myself, will be representing IBM as we continue to progress the initiative. Come join us! Come help us build tomorrow’s token world.
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