Towards a tokenised world? By 2030, 10% of global GDP will be in tokens
Tokenisation makes it possible to convert all the sensitive information of a real asset into a blockchain token, which becomes the digital representation of that asset. Experts predict that in under ten years, asset tokenisation will exceed USD 16 trillion and account for 10% of global GDP.
Tokenisation. While it may appear complex, tokenisation is a straightforward process. And most importantly, it is going to reshape the world and the way we interact with the buying and selling of goods. Tokenisation is the process of converting a physical or abstract asset into a digital token through a blockchain or similar platform. And a token is a digital representation of an asset or utility that can be securely transferred, stored and managed in a digital environment. For example, a property can be tokenised and thus its ownership can be shared across the network allowing several investors to own it and receive a share of the rental income or the capital gain on sale.
In under ten years, asset tokenisation will exceed USD 16 trillion and account for 10% of global GDP by 2030. At least that is what the Boston Consulting Group (BCG) believes. The reasons for this are the time and cost savings of blockchain technology, which will affect bank transfers, shares and investment funds. The World Economic Forum believes that this 10% will not be reached by 2030, but earlier, in 2027.
An example of how tokenisation can affect the world of real assets can be found in the case of Swiss bank Sygnum, which transferred the legal ownership rights of the 1964 Pablo Picasso painting Fillette au béret to the blockchain. The digital asset was broken into 4,000 tokens, which were purchased by over 50 investors at a price of USD 1,040 each. In this case we are referring to the tokenisation of the use of intellectual property.
This year, Win Investments, a company founded in Spain by a group of young Argentinians that seeks to “democratise the football industry” by digitalising the training contracts of players from different clubs, has started its operations. Thus, anyone can invest in that football career by acquiring tokens. This means that they are shareholders who make a profit when the player is transferred to another club. In the first pre-sale, 47,000 tokens were sold for an equivalent value of EUR 47,000.
In finance, tokenisation of shares enables investors to buy and sell fractions rather than the whole share, which allows many more people to participate and companies to raise more, and more diverse, capital.
As a result, the tokenisation of listed shares, together with unlisted shares, is set to rise from virtually zero to EUR 1.5 trillion over the coming seven years. Investment funds will also go from zero to USD 0.4 trillion, according to forecasts of Boston Consulting Group. In terms of financial assets, it is worth noting the increase in tokenised bonds, given that this is a more conservative segment and, in principle, less prone to change.
Real estate tokenisation
Real estate tokenisation has also become a unique way of investing in bricks and mortar. This involves several investors buying a property using tokens and receiving subsequent returns from the sale or rental of the property. In other words, the rights to a property are split up among the token-owners of that property.
Reasons for the rise of tokenisation
The data and forecasts clearly indicate the rise of tokenisation, but perhaps the reasons for it have yet to be spelled out in black and white. The reasons lie in saving time and money. According to Invesco’s latest report, transactions on the blockchain —tokenised assets— are completed in a matter of seconds, while the current Swift system takes up to three days.
These are some of the advantages of tokenisation:
- Having greater liquidity for any asset, as it can be bought and sold more easily
- Transactions made using tokens are recorded on a decentralised blockchain, increasing transparency and trust in the system
- Digital tokens are more secure than physical assets, as they are stored on a secure, encrypted blockchain
- Tokenisation removes the need to store and transport physical assets, making custody simpler and reducing the associated costs and risks.