What are digital tokens and how do they apply to blockchain technology

Digital tokens can have many benefits when it comes to asset or unit exchange in many use case scenarios – including the area of carbon credits. ByzGen’s CTO, Terry Leonard, explains how they work, their brilliant benefits, and how using digital tokens is a natural progression for ByzGen’s DLT, FALKOR.
Terry Leonard
Terry Leonard
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Digital tokens: what are they, and why are they useful?

As an extension to our platform FALKOR, the ByzGen development team is currently working on being able to support the creation, exchange, and tracking of digital tokens. 

The idea is that these digital tokens will represent an asset or unit that can be interchanged between parties. In a similar way to the data exchanges that our platform supports now, there is a need for tokens to be created and their issuance assured, and a need to manage and ensure the validity of the exchanges. For example, no token is exchanged that can’t be (you can’t ‘double spend’), and no party is involved that isn’t allowed to be. There’s also a need to audit the fact that the exchange has taken place, and for the parties within a network to operate, and be enforced against, a validated state of current ownership, policies, and the number of tokens issued. 

Multiple benefits to clients

Using digital tokens is a natural progression for FALKOR that could have many benefits to our clients.

  • Firstly it would help them reach new use cases that need this kind of token issuance, trading, and audit. A front running use case currently is in the carbon credits space, where units of the credits are issued as tokens. The value of the unit is agreed (1 token = a number of credits) and parties can then trade the tokens between them. Each of the exchanges are validated and auditable, and the parties exchanging are always enforced against the latest state of transactions held on the blockchain. You therefore create an exchange marketplace for these credits to be exchanged – with control. 
  • Secondly, there’s also data, and transactions around that data, which will need to exist where certain certification and emission levels should be tracked, assured, proven, exchanged, and audited, ongoing. So benefit number two for our clients is a combination between data transactions, and token based transactions, through one platform gateway – which widens the overall value of an integration to our platform, for our system integrator partners. 

For more examples of ​​tokenized carbon credits, check out what JustCarbon and Likvidi are doing to improve environmental management here, and China's new carbon trading system here

Why we’re focussing on private token exchanges

From a development point of view, our initial focus with FALKOR is centered on private token exchanges, where the number of tokens and the parties who can exchange them is tightly controlled. 

Another initial target is on exchangeable token types that have an agreed value, which is stable and doesn’t fluctuate. In the future, we’d extend this to look at how those private tokens could be transferred and used on public exchanges for wider usage or rewards (for example, crypto). And how we could then support different types of tokens, like non-fungible, within our exchanges. 

If our brief foray into digital tokens and all things blockchain has piqued your interest, why not take a look at what we do? Head over to our website where you can get in touch or book a discovery call.

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