Industry 4.0 and digitization. These keywords describe ongoing processes that will change our economy in the long term. Because even beyond the information-hungry tech giants, the trend towards digitization is opening up scope for new business models. Blockchain technology and token-based forms of financing could play an important role here.
At least this is the thesis of the economist Philipp Sandner, who wrote in an article for Forbes dreams of a “Tractor-as-a-Token” model. The title alone is reason enough to take a closer look at Sandner’s thoughts.
Digitization means greater flexibility
The starting point for all of these considerations is the observation that digitization is also paving the way for flexible and dynamic business models in the production sector. Sensors and the Internet of Things (IoT) ultimately make it possible to measure the actual use of machines and comparable capital goods – the tractors that give them their name. If companies used to sell their machines to business customers, they are now increasingly offering subscriptions or comparable “pay-per-use” models. Billing is based on usage – often fully automated.
These usage-based business models give manufacturers access to new customer groups. In this way you open up further sources of income. On the financing side, however, digitization also requires more flexible methods of raising capital.
From flexible loans to the token economy
The first flexible and data-based financing strategy that Sandner discusses are so-called pay-per-use loans. In Germany, for example, Commerzbank has been offering such a financial product since 2018. Company A sells a machine to company B, which finances it with a loan. Normally, Company B would always pay the same principal on the loan. With a pay-per-use loan, the repayment amount depends on the actual utilization of the machine. In phases of lower productivity, the repayment amount consequently decreases.
In Sandner’s scenario, however, things seem slightly different. Company A did not sell its machine to company B at all, only lent it out. This ensures a higher capital requirement on the part of the lending company in accounting. A pay-per-use loan can help in this scenario, especially for company A. In times when the company’s own machines are hardly used, the repayment amount would automatically decrease here as well. Liquidity would be guaranteed.
In contrast, tokenization allows a financing option that does not require banks. If the machines – let’s say a tractor – are mapped as tokens, even small investors can invest in them. The acquisition of the tokens secures them a share of the profit that is generated by using the machine. The value proposition of the Internet of Things and blockchain technology would be confirmed here in the most impressive way. Because while the token sale is relatively quick and easy, an automatically calculated profit distribution is guaranteed.
Decentralization and flexibility – the genuine advantages of digital assets would thus come into their own in such business practices. Tokenization therefore also promises interesting use cases in the decentralized power grid of the future.
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