Will tokenization change the face of the global economy? This is the opinion of the CEO of BlackRock. For Larry Fink, the future of finance will be through the tokenization of assets.
What is tokenization?
A token is a unit of value of a digital asset. Tokenize tokenize) means the fact of create programmable digital unitsvia an ssmart contract. The bottom line is that tokenization is a use case of blockchain. Because if cryptocurrencies are today the most popular application of this innovation, the potential of this technology goes far beyond this framework. Indeed, we can potentially tokenize many things. In theory, all tangible objects in our material world could be affected.
It is therefore a new way of trading traditional assets that presents itself. The future of financial markets will it go through tokenization? In any case, there are obvious advantages to tokenize active. Starting with the flexibility it offers. For example, instead of investing a large sum in real estate, the investor can choose the exact amount he decides to mobilize. No need to take out a loan from the bank, for example, to gain exposure to the real estate market. Do you want to invest 1200 euros in a property? No problem, you will have a title deed to the height of this sum. Thus, there is no longer any need to monopolize your entire savings to invest. By dividing the assets in this way, a new market is emerging.
Tokenize to rule better
Real estate, stocks, commodities, a lot of traditional investments are thus concerned. We also think of alternative assets, such as land, wine or art (even if on this side, NFTs already seem to have a head start). According to BlackRocka multinational asset management company, tokenization will offer a “ instant settlement » and ” reduced fees “. Its CEO, Larry Fink, believes that the development of this type of technology is not a threat to BlackRock’s business model. On the contrary, it is, according to him, an unprecedented opportunity. Because this fragmentation via the blockchain would make it possible to hold in the palm of the hand a whole range of new digital titles. Another way of seeing the world is now taking shape.
Tokenization: growing interest from investment funds
You know the saying: money rules the world “. And of money, BlackRock has plenty of it. We must therefore take the statements of Larry Fink quite seriously. Despite everything, tokenization remains for the moment a quite confidential phenomenon for players in traditional finance. But for the American giant, tokenization could in particular allow financial services to be provided “ more openly “. An elegant way of saying that it will bring him new customers. Especially since in an economy in the throes of recession, investment funds are prospecting to find attractive new financial products. Moreover, tokenization can also be a way for these companies to increase their capital. They can in fact free themselves from the legislative constraints applicable to traditional markets.
In addition, more and more companies are betting on tokenization. This is the case of Flowcarbona start-up of tokenization of carbon credits. The company recently raised $70 million from top investors such as Andreessen Horowitz, General Catalyst or Samsung Venture Investment. In November 2022, JPMorgan bank in turn turned to the Polygon blockchain to exchange tokenized cash deposits. Security tokens are thus in the sights of several large American groups. Another sign that shows that the phenomenon is gaining momentum: the BPI (French Public Investment Bank) is offering get trained in issues related to tokenization.
BlackRock Bets on Cryptocurrencies and Blockchain, Despite FTX Disaster
We now know that BlackRock was directly affected by the shock wave of the FTX case. Indeed, the group had invested more than 24 million dollars on the platform, now bankrupt. However, the enthusiasm of the American giant does not seem to have started. Larry Fink believes that this accident does not change the strategy of the group, which maintains a very ” crypto friendly “. Despite this optimistic view of the future of tokenization, the CEO believes that most cryptocurrency-related businesses will not stand the test of time. This, while also affirming that blockchain technology would however be “very important”.
Are we on the verge of a revolution in the global economy? Anyway, many players are already in the race for tokenization.
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