Industry Insights: “The Tokenization of Everything”
Tokenization is potentially the largest use case of blockchain and distributed ledger technology, whose value could exceed $24 trillion by 2027. In February on this blog, Christian Dick and Christian Pohle analyzed the value proposition of tokenization for customers, financial intermediaries, and regulators, including fractional ownership, the ability to take a stake in previously illiquid assets such as art objects or real estate with only small amounts (Dick & Pohle, 2021). Regulators around the world are currently working to create the regulatory framework to tokenize debt and equity instruments; the current non-fungible token (NFT) hype[1] is just another example of tokenization. This also shows: Tokenization is becoming relevant for almost all industries and will create new business models. However, understanding the concept and navigating the world of tokens is not easy.
In my lecture, “The Tokenization of Everything,” I explore the topic of tokenization from the concept all the way to the status quo of the token economy. The lecture was created as part of the Frankfurt School Blockchain Center’s Industry Insights series.
Part 1: The Concept of Tokenization
In the first video, I start with the origin of the blockchain – Satoshi Nakamoto’s white paper – and explain how it led to today’s token economy, the fundamental problems that distributed ledger technology addresses, how it works, and how it enables the exchange of value. I then provide several definitions for the term “tokenization.”
Part 2: Token Design and Use Cases
In the second video, I show how tokens form a new basis for the transactions of assets in new business ecosystems, introduce the core value proposition of tokenization in enterprise networks, and dive deeper into the different characteristics of tokens.
Part 3: Tokenization as an Enabler for Innovative Services
In the third video, I highlight several use cases where the creation of a token promises not only more efficient processes but also new innovative services. I then go into more detail presenting the blueprint for the tokenization of a car and three specific use cases involving different participants of the emerging ecosystem.
Part 4: Token Economy: Status Quo and Outlook
In the fourth and last video of the lecture series, I give an overview of the most important milestones in the development of tokenization until now. I then proceed to talk about current developments in the market and illustrate how tokenization is shaping the current financial landscape creating new roles in the financial system. I conclude with an outlook on what the future evolution of tokenization could look like.
Interview
In this interview conduted by Stefan Schmitt from the Frankfurt School Blockchain Center you can learn more about me and my work as a blockchain researcher at the Business Engineering Institute St. Gallen. I also talk about what the most interesting application of tokenization is from my point of view and which applications I think will be the most successful in the short term. If you have any questions concerning the lecture series or my work at the BEI, I will be happy to answer them in the comments.
Industry Insights by the Frankfurt School Blockchain Center
Industry Insights is a format, in which industry experts share their experience and views on blockchain, DLT and cryptocurrencies. Each series consists of a lecture in several parts and an interview with the respective experts.
[1] For those who haven’t heard of non-fungible tokens, I recommend this entertaining article from The Verge that tells you everything you need to know about NFTs.
Sources
Frankfurt School Blockchain Center (2021). Industry Insights: “The Tokenization of Everything”. https://my.blockchain-academy.io/en/blog-5/industry-insights-the-tokenization-of-everything
Dick, C. & Pohle, C. (2021). Tokenisierung von Assets, der nächste Hype nach Bitcoin – ein Blick auf das Wertversprechen. https://ccecosystems.news/tokenisierung-von-assets-der-naechste-hype-nach-bitcoin-ein-blick-auf-das-wertversprechen/
