Tokenization of small and medium businesses

Tokenization of small and medium businesses

The standard IPO procedure (initial public offering) is outdated, followed by the ICO industry, but this system has high risks and is unregulated. Therefore, the new trend of tokenization compensates for the disadvantages of the ICO and provides an opportunity for businesses to transfer assets into a digital format.

Speaking of medium and small businesses, the main problems faced by entrepreneurs:

  1. The inability to compete with large chains;
  2. Difficulty working with foreign partners;
  3. Delays in transfers, followed by delays in deliveries;
  4. Difficulty moving into the IT sector.

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Tokenization will solve:

  • The problem of payments – no currency conversion fees, transactions are processed by the blockchain platform and executed instantly, 24/7 transactions, secure storage and transfer of tokens;
  • Equity ownership – digitizing a company’s assets will make it seamless to buy a piece of the company from anywhere in the world, making it easy to get funds for further business development;
  • Legal issues – create a legal framework once and use it throughout the life of the project.

Attracting investment in all areas of business

Classic investment funds adhere to a well-established system of capital allocation by direction. The crypto market has different rules. If a company has a product, a clear roadmap, a team and a plan, it is guaranteed to raise funds. 

How to increase a coffee shop chain’s income by digitizing assets

Let’s look at a real example of tokenization. The coffee business has demand, high margins, and strong competition. Large chains easily squeeze out smaller companies. 2 tokenization options:

  1. Asset and payment tokenization – this model would reduce payment costs and attract additional funds to the company by selling shares;
  2. Tokenization of payments – the model is designed to speed up and simplify international transactions.

It is also recommended to introduce the possibility of buying the company’s products with tokens. When transferring assets to blockchain, an audit should be conducted to establish: the number, value and format of tokens. These items will be based on the network’s current assets, audience, marketing strategy and several other factors. 

Every time a foreign currency is bought or sold, 3% is lost on exchange rate differences.

  • Decentralization. With the move to blockchain, most financial processes are automated. In addition, the owner receives transparent statistics, which eliminates the possibility of “black accounting” and protects the business from the misconduct of employees. This will reduce legal costs and potential fines to a minimum.
  • Banking. Reduce transactions by 50% by moving most payments to blockchain. Utility payments, payments to employees, etc. will remain. This will reduce costs for bank services.

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