What tokenization solves that makes projects like Lofty AI possible?

post by fox89 on Sep 18, 2021

What tokenization solves that makes projects like Lofty AI possible? Can not we do this just using points or something similar? I’m not sure what tokens bring here that previously were not possible. Basically I don’t see what problem tokenization is solving here.

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post by fabrice on Sep 19, 2021

I don’t know Lofty AI specifically.

But in general, a blockchain can always be replaced by a centralized database, if you are ok trusting the authority managing the database. Such a database can store points or tokens and update balances according to transactions it receives.

What a public blockchain like Algorand provides compared with a basic database is decentralization: you don’t need to trust any single entity to record properly transactions and not change number of tokens after the fact.

Furthermore, contrary to a private database:

• There is almost no risk that the database becomes unavailable because the owner gets bankrupt or hacked.
• Any hack is much easier to spot and revert as the history of all transactions are there forever on the blockchain.