The financial landscape is on the brink of a far-reaching transformation, and it’s driven by a concept known as tokenization.
What exactly is tokenization?
Imagine taking physical assets like real estate, stocks, art and even renewable energy sources and converting them into digital tokens that can be seamlessly traded on the internet. Tokenization can be applied to regulated financial instruments such as equities and bonds, tangible assets such as real estate, precious metals, copyrights to works of authorship intellectual property.
From off-chain to on-chain
This process promises to unlock liquidity and democratize traditionally illiquid markets and it enables fractional ownership, opening investment opportunities to a wider audience.
Why does it matter?
Currently, more than half of the world’s assets are hard to buy and sell, leading to issues like lack of price transparency and limited accessibility. Tokenization could potentially have wide-reaching impacts — as, theoretically, any asset such as gold, real estate & commodities could be tokenized on the distributed ledger.
Blockchain’s transparency and security ensure trust in ownership records. Its potential to convert illiquid assets to liquid assets and disrupt traditional markets has attracted significant attention and innovation. In essence, tokenization is reshaping how assets are bought, sold, and traded, ushering in a new era of asset management and investment possibilities.
“Will asset tokenization happen overnight?”
Most likely not — however, progress is accelerating.
Almost anything of value can be tokenized and tokenization of financial and real-world assets could be the ‘killer use-case’ Blockchain needs to drive a breakthrough. This promises 24/7 trading and fractional ownership. By 2030, we’re looking at a colossal $16 trillion game-changing opportunity. Recent reports, including HSBC, JP Morgan, CITI and Boston Consulting Group, have illuminated the immense potential of this digital revolution.
SOURCE: BOSTON CONSULTING GROUP (BCG)
2030 Estimate | $700 billion tokenized
2030 Estimate | $1,000 billion tokenized
2030 Estimate | $1,500 billion tokenized
2030 Estimate | $500-1000 billion tokenized
2030 Estimate | $1,900 billion tokenized