Top Reasons Why Businesses Are Investing in Token Development

Imagine if your business could attract new investors and new customer markets and build trust through one single pioneering action. 

Would you take such an action? 

Most businesses are already answering a resounding ‘YES!’ to that question, while others are still trying to think of reasons why crypto isn’t the future.

Wondering what the single action is? It’s token development! 

That’s right! Businesses across different industries are now building different in-house digital assets or tokens to put them ahead of the competition. 

Care to know why they are investing in token development? 

10 Compelling Reasons to Invest in Token Development

Whether you’re new to tokenization or looking to deepen your understanding, this guide will show you why token development is becoming a game-changer for forward-thinking leaders.

Spoiler alert: Their reasons are valid, and you may be tempted to start token development today! 

1. Increasing liquidity and accessing new markets 

Many businesses are investing in token development because tokens help them unlock the value of their assets by attracting many investors and accessing new markets. 

Here’s how: 

Unlike traditional assets like stock, bonds, real estate, or private equity, tokens can be exchanged instantly on centralized or decentralized platforms. More importantly, token trading doesn’t involve lengthy settlement times or intermediaries. As a result, investors can easily enter or exit trading positions quickly. Token development also helps businesses divide their traditionally illiquid assets into smaller, tradable units. 

The bottom line is that token development helps businesses trade their assets with investors more easily, increasing their liquidity. 

By extension, the fact that token development makes it easy to trade a business’s assets attracts so many investors, so much so that the business inevitably starts to attract all kinds of investors. This is how token development helps businesses access new markets. Furthermore, the fact that token development leverages blockchain technology means that a business’s tokens can be transferred seamlessly globally without any geographical restrictions. 

Therefore, when a business invests in token development, it is not ‘chasing the new shiny thing’ or ‘doing the new cool thing.’ Rather, it is creating an avenue to attract more business by increasing its liquidity and attracting all kinds of investors, from retail to institutional. 

2. Raising capital and unlocking new revenue streams 

When a business accesses new markets and increases its liquidity, it is almost inevitable that it will raise capital or unlock new revenue streams. However, token development has a more direct impact on a business’s fundraising and revenue-generation efforts. 

With token development, businesses can obtain funding or raise capital for a new venture without incurring debt or giving up equity. Most modern startups are leveraging this opportunity by launching alternative capital-raising strategies such as Initial Coin Offerings (ICOs), Security Token Offerings (STOs), and Initial DEX Offerings (IDOs). 

Basically, the company creates different forms of tokens (depending on the specific alternative capital-raising strategy being used). It issues them to interested investors for set fees in exchange for their monetary investment in the business venture. The process involves no intermediaries, little running costs, and little or no complexities that are often associated with the traditional venture capitalist process or stock market listings. 

In return, the investors enjoy early access to the innovative projects a business is launching: a win-win situation for both parties. Finally, these tokens can later serve as a continuous revenue model for the business, as it can decide to sell them to as many investors as it pleases, depending on the nature of its project. 

Related Blog: ICO vs STO vs IEO: Right Fundraising Choice

3. Enhancing customer loyalty and building a community around the business 

Businesses also use token development to incentivise community development around their various value offerings. These tokens serve as a basis for reward mechanisms that keep the investors and customers invested in the business’s activities. For example, some businesses issue governance tokens to give customers the right to influence certain project decisions. This way, customers don’t just feel like they are only customers or money-making entities for the business. Rather, they feel that they develop a sense of ownership, and by extension, loyalty to the business. 

The same applies to staking mechanisms. These mechanisms encourage customers to commit their resources to securing a business network, offering different kinds of rewards. 

Apart from the promise of rewards, businesses that issue tokens to their customers keep them engaged through different token-related activities such as referrals, staking, and even contributions to platform development.

As a result of all this, the business inevitably ends up with a vibrant and engaged community of customers and stakeholders. This loyal base of active customers makes the business more credible, trustworthy, and ultimately solid for long-term stability. It also makes the business’s user acquisition and retention efforts very successful.

4. Improving security and mitigating risks 

Businesses that venture into token development do so with the help of private blockchain networks. As a result, they enjoy one of the standout benefits of blockchain technology in terms of security. The blockchain’s unique structure and cryptographic principles improve data traceability within its network. This is also one of the benefits of token based authentication, which inevitably comes with token development. By so doing, the business increases trust, security, and data integrity across its processes. 

More importantly, when customers and investors start to adopt these tokens, the private blockchain’s decentralised infrastructure guarantees a certain level of privacy and anonymity that most investors and customers love. Furthermore, the fact that businesses base their token development infrastructures on private blockchain networks means that participants don’t have to worry about third-party verification services, thus keeping their private information within the network. 

On the financial side, all these are very cost-effective. In terms of efficiency, keeping things in-house is also efficient and secure, and that’s why smart businesses are now prioritising token development. Token transactions are very secure, transparent, and immutable, thus building trust among customers and investors. 

5. Preparing for the future 

Digital assets are increasingly playing a more active role in the global financial ecosystem. Statista reports that the digital assets market worldwide is projected to generate a staggering revenue of USD 100.2 billion by 2025. These numbers point to the fact that the global financial ecosystem is gradually shifting towards adopting cryptocurrencies and tokens as mainstream choices for financial services. More specifically, asset tokenization is no longer a niche experiment but a mainstream trend shaping various industries, ranging from real estate and healthcare to art and supply chain management. 

As a result, businesses are investing in token development now to position themselves strategically ahead of competitors in the years to come. 

For example, in 2024, BlackRock launched its first tokenized fund, BUIDL. This attempt to drive transformation for digital assets infrastructure provides qualified investors with the opportunity to earn US dollar yields by subscribing to Securitize. As a result, BlackRock’s tokenized fund has now reached $2.89 billion, making it the largest tokenized market fund in the tokenized treasuries market. The company got into token development early, before most of its competitors recognized the opportunity, and it is now enjoying the benefits. 

In addition, businesses are also investing in token development to prepare themselves for the emerging Decentralized Finance (DeFi) ecosystems, AI revolution, and cross-border interoperability. These advancements are rapidly evolving, and businesses that get into token development right now give themselves a head start over others in terms of adapting to future market shifts and technological disruptions. 

6. Creating a payment settlement layer for smoother transactions 

In simple terms, a payment settlement layer is a component of a payment system or infrastructure responsible for facilitating the transfer of funds between different parties. Now, within a business, there’s usually a financial ecosystem between the business itself, customers, and investors. Usually, these entities have to go through third-party financial systems like banks, clearing houses, escrow services, and other traditional financial institutions to process all kinds of funds or asset transfers. However, businesses are now trying to cut out these middlemen by launching their native tokens or digital assets, and it makes absolute sense. 

With the help of a token-based settlement layer, these businesses can integrate the issuance, trading, and settlement of assets on a single private blockchain network. 

To what end, you ask? 

Well, when businesses take on these crypto token investments, they get to eliminate the inefficiencies and frictions that are typical of traditional financial institutions and middlemen. As a result, transactions are faster; the risks of delays are lower; and finally, the risks of unsettled transactions are near zero. Basically, all entities (investors, businesses, and customers) have a higher chance of processing transactions within the context of that business with absolute certainty that it will be successful. Likewise, the elimination of these middlemen automatically lowers operational costs and counterparty risks. 

7. Creating a decentralized ecosystem 

The need to create a decentralized ecosystem is closely linked to the idea of creating a payment settlement layer. Most businesses that invest in token development recognize the potential benefits of having a transparent, secure, and community-driven platform surrounding their business. They recognize what it means to run a business that operates independently of centralized control, especially by third-party entities. 

Instead of concentrating the power of governance and decision-making in the hands of a single entity, businesses that invest in token development share this responsibility among a broad network of participants with the help of blockchain technology. The tokens they create with this system can now be used for different purposes, such as representing ownership, granting governance rights, automating transactions through the use of smart contracts, and encouraging user participation. 

Finally, by creating a decentralized ecosystem, businesses that adopt token development put themselves at the forefront of innovation. They are much more likely to adapt seamlessly to the DeFi ecosystem when it matures and the emerging Web3 markets. 

8. Creating in-game currencies 

The aim of creating in-game currencies through token development embodies almost all of the general business benefits of token development. From a gaming perspective, it is through that token development makes sense for a business involved in building video games because it automatically creates a vibrant financial ecosystem around the games. It means that gamers can purchase and sell in-game items from the business and even from their fellow gamers. 

However, the potential benefits run deeper than that from a business perspective. 

For instance, using crypto tokens as in-game currencies inadvertently drives user engagement and community building because of the incentives of financial rewards. And if there’s one thing investors love, it is a business gaining massive traction from users. Therefore, creating in-game currencies with token development can also help a business attract more investors and liquidity. 

More importantly, it goes beyond the purchases within the game as secondary markets will also evolve. In fact, the business may end up opening up a channel for direct token sales so that gamers can literally purchase tokens outside of the game for use later in the game. 

9. Improving operational efficiency and transparency 

As you may well know, transparency, immutability, and security are some of the core features of blockchain technology. As a result, when a business ventures into token development with the help of blockchain technology, it inevitably enjoys all these benefits. The fact that tokenization leverages blockchain’s immutable ledger to provide a clear, real-time, tamper-proof record of transactions and asset ownership directly addresses the long-standing issues of operational efficiency and secrecy associated with legacy business systems. 

Here’s how: 

All the moving parts of a business, especially those related to financial activities, will be documented on the business’s private blockchain network. Consequently, this reduces information asymmetry and encourages the business to develop fairer and more efficient systems. And investors love that! It shows that the business is well run and, more importantly, that the business is very compliant with regulatory requirements. This portrays the business as a safe investment vehicle. 

Let’s take Kinexys, a blockchain-led solutions initiative by JP Morgan, for instance. The blockchain infrastructure reimagines the transfer of money, assets, and financial information with the help of tokenized investments. In the past 4 years since it launched, these solutions have averaged a whopping sum of USD 2 billion in daily transaction volume. Furthermore, the entire network has onboarded up to 75 banks within that period. Talk about efficiency! 

The most amazing part is that this efficiency and transparency aren’t limited to just finance. When it comes to other aspects of business operations, such as corporate governance or supply chain management, token development also democratizes shareholder participation and ensures safety and authenticity, respectively. 

In simple words, token development just makes a business perform better. 

10. Creating a competitive advantage 

As a result of the excellent performances, businesses that embrace token development inevitably develop a competitive edge over their counterparts. Their processes are quicker, more efficient, and ultimately more profitable. 

Furthermore, by building something tangible with this novel technology, they are preparing themselves for the future of investing, business operations, and technological innovation, and it is just beautiful to observe. 

Customers love it and so do investors, and that’s why businesses that embrace token development early thrive better than others who don’t. 

Conclusion 

From BlackRock to JP Morgan, we’ve seen clear cases of businesses investing in token development moving quickly ahead of their competitors. They generate fresh liquidity, establish effective payment layers, construct decentralized ecosystems, and improve operational efficiency and transparency. Additionally, tokenization prepares businesses for a wider digital ecosystem that’s currently undergoing massive changes. 

Would you love to be one of the pioneers and early birds of this change? 

Debut Infotech Pvt Ltd provides specialized token development services based on your company’s objectives. We are here to assist you in utilizing tokenization for long-term success, whether your goal is to streamline transactions, gain access to new markets, or prepare for the future. 

Let’s start preparing you for the future today!

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