Tokenization is an exciting prospect and tokens are a building block for the future of the internet. The possibilities for Web3-powered businesses seem limitless (even when the crypto space is rocked by scandals and collapses, as we saw with FTX in recent weeks). Tokens enable investment, decentralize decision-making, support the creation and curation of art, allow for value and asset exchange, and so much more.   

However, rushing into tokenization might not be the right call for your business. At least not yet. 

As you consider the role of tokens in your business, here are some questions to ask before taking action. 

Should We Tokenize the Business? 

The first question, of course, is, “Should the business be tokenized at all?” A simple, straightforward yes/no question—right?

Not so much. 

To answer it, as members of ON_Discourse discovered when we were considering whether to tokenize the business or use an off-the-shelf technology, we had to ask a series of other questions first. 

And as with any strategic business discussion, if you want real, useful answers, you need a team of trustworthy folks around you. People who aren’t afraid to tell each other no. People who aren’t afraid to say things like, “You are not going to like my answer”—and then say the thing anyway.  

What are the Benefits of Tokenization? 

The benefits of tokenization might seem obvious. Tokens enable interoperability, connection, co-creation, data ownership, and much more. 

However, digging into this question might show you that the benefits of tokenization don’t necessarily apply to your business, or that the effort and cost of tokenization outweighs those benefits.

For example, ON_Discourse members saw multiple potential benefits of tokenization for our business model, including: 

  • Acknowledging members and contributors who participate in real discourse
  • Aligning our company’s mission and values with the business structure and technology
  • Allowing us to create gated content and use NFTs to authenticate access
  • Enabling collaboration with other communities
  • Ensuring early adopters and core members feel a sense of ownership

There are real potential benefits of tokenization for Web3-enabled businesses now and in the future. 

Understanding the benefits of tokenization—and how they align with your business strategy, priorities, and future goals—can help you make a decision about how, whether, and when to introduce tokens. 

Is Tokenization the Best Tool for Realizing Those Benefits? 

Web3 is a source of real innovation, and tokens are an essential piece of the puzzle. But are we there yet, technologically speaking?

Will your business be able to take advantage of the promises of tokenization (and Web3-powered business tools more broadly)? Or will implementation be time-consuming, expensive, and inefficient? 

As we’ve talked about elsewhere, consumer experience will be a defining feature of Web3—and Web3’s consumer experience is currently dismal. Will leaping into tokenization help or hurt your brand’s reputation? 

It’s easy to get distracted by the possibility of tokenization and overlook the reality of the current experience. You could be neck-deep in development before you realize you’ve made an expensive, time-consuming mistake.  

ON_Discourse is a new company with big goals. Those of us who discussed the possibility of tokenization are all-in on Web3. But does that mean we need to be a Web3-enabled company from day one? 

No matter how excited we all are, we discovered through our discussion that the available technology doesn’t match our vision. There’s no current approach to tokenization that does what we want and does it better than an existing tool.  

As a result, we had to ask the other important questions, like: 

  • Would introducing tokenization over-complicate things at this stage of our development?
  • Might tokenization make it difficult to scale as fast as we want to?

Do we want to tokenize? That’s a resounding yes from everyone.  

Are we doing it right now? No.  

The conclusion you reach might be different, based on your strategic goals and priorities. However, realistically assessing the technological landscape must be a central part of your decision-making process. 

So: Should You Tokenize Your Business? 

The right answer to this question will depend on a number of factors—your business model and goals, what you hope to accomplish with tokenization, and whether you have the resources to devote to development. 

When it comes to your own business, ask the following questions:

  • Do you need to tokenize? That is—is tokenization the best solution, or is it an exciting new distraction? 
  • Is there a simpler, off-the-shelf tool you could use while token technologies are developed?
  • What are the benefits of tokenization? Do those benefits apply to your company or project?
  • Are you interested in tokenization as a powerful Web3-enabled tool or as a marketing tactic?
  • What properties of tokenization might be applicable to your business now? 
  • How might you add tokenization in the future?

Don’t tokenize just to tokenize. Don’t do it just to say you’re Web3-enabled. Make sure you’re having the right conversation first.