A 100-page report issued by the World Economic Forum estimates the tokenization market to be worth $867 trillion with an expected 80x growth rate by 2030.
A 100-page report issued by the World Economic Forum estimates the tokenization market to be worth $867 trillion with an expected 80x growth rate by 2030.
Recent indicators seem to be pointing to the beginning stages of a recovery in the crypto market, largely due to the filing of a Spot Bitcoin ETF by the bluest of all the blue chips – BlackRock.
BlackRock CEO Larry Fink was recently quoted as saying that tokenization will be “the next generation for markets.”
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Tokenization, for those new to the term, is a process that converts real-world assets, such as stocks, bonds, art, luxury watches, real estate, or just about anything that holds intrinsic real-world value into digital tokens.
These tokens, traded on blockchain networks, represent ownership or rights to the underlying assets. They can be transferred and traded in a secure and transparent manner, much like passing a baton in a relay race, but in the digital realm.
The potential of tokenization to disrupt traditional finance is massive, a tectonic movement that could revolutionize the financial industry.
To get some deep insight on the current state of affairs we caught up with Thomas Carter, veteran entrepreneur and thought leader in the area of tokenization and digital securities.
From predicting crypto’s $1T crypto market cap to being one of the earliest pioneers of security tokens, Carter has been pushing innovation in this space for over seven years.
As the Founder of Deal Box, a blockchain and AI powered security token issuance and investment platform, and the CEO of True I/O (recently raised $9M) Carter has been instrumental in guiding the development of asset tokenization. His expertise and vision in these areas have made him a sought after mentor.
Along with creating one of the first security token issuance and investment platforms (Deal Box), Carter’s contributions to the tokenization ecosystem include creating user-friendly fintech solutions that enable broader adoption.
For example, as founder of TNS (recently merged into True I/O) he developed a domain naming service that simplifies the complex process of blockchain transactions by creating user-friendly IDs in place of lengthy blockchain addresses called Digital Names.
His acumen extends beyond tokenization and includes the field of cybersecurity and supply chain management as the driving force behind True I/O.
True I/O is an ecosystem of blockchain/AI/VR enabled solutions that enhance password security, secure sensitive data, and fortify cybersecurity infrastructure as well as supply chain security for mobile or embedded devices – that is, IoT (Internet of Things).
One of True I/O’s flagship products is the Universal Communications Identifier (UCID), a cross-network security solution for any device connected to any network.
True I/O and Deal Box recently partnered with Fireblocks, a platform that secures digital assets. Fireblocks provides a secure infrastructure for moving, storing, and issuing digital assets, enabling businesses to securely scale their digital asset operations.
Recently, Carter has expanded his expertise in digital securities to include tokenization of Real World Assets (RWAs). RWAs refer to tangible assets that exist in the physical world, such as real estate, precious metals, commodities, artwork, private equity, etc.
These assets have inherent value and can be tokenized using blockchain technology, which involves representing ownership rights as digital tokens on a distributed ledger.
The tokenization of RWAs presents a generational opportunity in the finance industry. By tokenizing real-world assets, individuals and institutions can gain fractional ownership and access to these assets, which were previously limited to a select few.
Tokenization enables the democratization of asset ownership, allowing smaller investors to participate in traditionally exclusive markets, enhanced secondary market liquidity and cross-border transactions.
In a recent interview Carter had this to say about the BlackRock ETF and Fink’s remarks on tokenization –
“I’ve always felt that tokenization was the bigger story here, not cryptocurrencies, albeit an important part of the crypto ecosystem. After 20 years in traditional finance I realized early on that the genie in the crypto bottle was the transparency, universal access, and reduced frictional costs made immutable by cryptography.
By bringing traditional assets and financial products on-chain we are unlocking trillions worth of liquidity that is expected to be anywhere from 10-40% of global GDP by 2030. Those are staggering numbers.
I think the timing of the BlackRock ETF is brilliant in that it coincides with a Bitcoin halving event which is a deflationary algorithm programmed into Bitcoin that reduces the available supply and the GWTH (Greatest Wealth Transfer in History). The Boomers are transferring that wealth to a generation that grew up with blockchain tech.
Not only does the ETF cash in on the $30+ trillion dollar retirement market but it also sets itself up to be a likely preferred investment vehicle for the incoming generation.
Despite the fact that scores of previous Bitcoin ETFs have been rejected by the SEC, I think given the size and gravity of BlackRock, that they wouldn’t place the bet unless they had good reason to expect a win.
That win I believe is and will be the catalyst for the next bull market in crypto which if I had to speculate will take us somewhere into the vicinity of a 10 trillion dollar crypto market cap before 2025. The crypto market has been waiting for an incremental buying trend and this is it.
“Now is the time to act.”
One area of tokenization in particular deserves particular attention. The tokenization of private equity, Carter’s forte, and the core offering of Deal Box.
Tokenization of Private Equity
Private equity tokens are a digital representation of ownership in private equity investments on the blockchain.
These tokens enable fractional ownership, improved liquidity and simplified management of private equity assets.
A recent study found fund managers in France, Spain, Germany, Switzerland and the United Kingdom, collectively responsible for around $546.5 billion in assets under management, found that 73% of the participants identified private equity assets as the most likely first to see significant tokenization.
Moreover, the World Economic Forum has estimated that up to 10% of global GDP could be stored and transacted via distributed ledger technology by 2027, with crypto-asset custodian Finoa reporting that tokenized markets may be worth as much as $24 trillion by the same year.
The Benefits of Private Equity Tokenization
Private equity tokens shine in their promise of heightened liquidity. Historically, private equity investments have been hamstrung by extended lock-up times and scarce exit strategies, deterring certain investors. Tokenization, however, transforms these assets, facilitating their trade on secondary markets, and presenting a more fluid investment option. This revamped liquidity simplifies the process for investors to buy and sell, and unveils the worth of previously hard-to-move assets, appealing to a more diverse investor base.
Moreover, private equity tokens usher in an era of transparency in a traditionally guarded sector. Rooted in blockchain technology, these tokens enable public monitoring of both ownership and transaction history. This immediate and open view into assets can elevate trust and diminish risks linked to deceit and poor oversight.
Lastly, these tokens revolutionize accessibility to the private equity realm. They lower the entry barrier for everyday investors by offering pieces of ownership in private entities or funds. This fractional ownership invites modest-scale investments, widening the door for more people to invest in and benefit from private sector growth. Such inclusivity not only enriches investment portfolios but also spurs innovation and economic expansion by channeling more funds into the private domain.
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