Researchers at Citi predict that trillions of dollars worth of assets will have been tokenized by the end of the decade.
While blockchain’s uptake has been sluggish, a study from a financial firm suggests that a tipping point may soon be reached.
By the end of the decade, Citi predicts that trillions of dollars worth of stocks will have been tokenized, making tokenization of financial and real-world assets the “killer use-case” that blockchain requires to cause success.
According to a study by Citi in March, “almost anything of value can be tokenized.” The bank estimates that $4 trillion in tokenized digital assets and $5 trillion in central bank digital money will be circulated across the world’s leading countries.
Blockchain’s potential for tokenization has been talked about for a while. Still, its innovations are invisible because blockchain is a back-end infrastructure technology without a prominent consumer interface, according to Kathleen Boyle, managing editor of Citi GPS.
The sector is nearing a turning point, Boyle said, and the potential of blockchain may soon be realized despite the slow invention speed.
According to Boyle, “successful adoption” will occur when a billion people use blockchain without realizing it. That will be propelled by the widespread use of blockchain-based social media payments, tokenized gaming assets, and central bank digital currencies.
Decentralized digital IDs, zero-knowledge proofs, Oracles, and safe links are tools needed for widespread usage. To enable acceptance and scaling without “hindering innovation,” legal infrastructure and regulation concerns are also necessary.
As Boyle put it, “although we think mass adoption could still be six to eight years away,” motivation for adoption has changed favorably as governments, big organizations, and businesses have moved from exploring the advantages of tokenization to experiments and demonstrations of concept.
Citi isn’t the only one who thinks so. BlackRock CEO Larry Fink discussed the “exciting applications” of the underpinning technologies in digital assets in this season’s yearly letter to stockholders earlier this month.
Fink argued that tokenizing asset classes could reduce buyer transaction costs and speed up value distribution across marketplaces.
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