A token is the digital representation, in the Blockchain world, of an object that has value within a context, is issued by a private entity and is only valid under this particular universe. The bitcoin is a token, but not only can relate to all cryptocurrencies, they can aspire to other utilities.

At the Breakfast & Business event of the German-Salvadoran Chamber of Commerce and Industry, our managing partner, Héctor Torres, shared his experience in the process known as “Tokenization”, where goods and services can be traded electronically, through a digital representation.

One of the ways in which our expert explained Tokenization was through the use of negotiable instruments, checks or bills of exchange which, like using the token in this context, seek to “dynamize the economy, accelerate mercantile traffic and gain faster and easier access to financial resources” and which were a revolution at the time.

“In 13 years, I understood that technology was the only way to be able to compete, to be able to improve the acceleration of companies and to be able to move faster,” Torres told guests at the event, among them the banking and financial services sector.

Our managing partner explained that there are three ways to tokenize: The first refers to the creation of a token that can represent financial securities or allow access to benefits for holding them.

The second way refers to the possibility of proving ownership of unique things through technology and enables the commercialization of goods that are usually registered and the commercialization of intellectual property. Finally, any object with economic value makes it possible to dynamize known production processes and business cycles.

Torres also stated that there are different advantages to using Tokenization: Reducing intermediation costs, reducing the cost of capital, offering disintermediation, and facilitating access to investment and disinvestment.

If you want to learn about other key aspects about the use of tokens, distinguish the types of tokenization and all its steps, you can contact the legal and IT team of Torres Legal to apply these procedures in your business and daily life.

-Written by Torres Legal Team.