Capital markets are one of the most important pillars of the modern economy and, therefore, of society itself. By facilitating the free movement of capital, these markets enable innovation and progress, thereby creating new financial opportunities for all. Not content with democratizing traditional capital markets over the past few decades, blockchain and fintech are now looking to radically change them forever.
Traditional capital markets, while more efficient than the systems that preceded them, have long struggled to develop. This was reflected both in terms of accessibility and application to other types of assets. While the former has now been partially resolved by technology, the latter challenge persists. Not only did legacy approaches make it difficult to achieve the level of “abstraction” required for the efficient flow of real assets, but also to do so in a way that satisfied all interested parties.
This difficulty means that real-world assets like real estate, commodities and art have not enjoyed the same level of liquidity and efficiency as their intangible counterparts. This makes sense considering the different ways these assets are used and the technical complexity of managing them. However, the lack of efficient capital markets for real-world assets represents a missed opportunity that was recognized long before blockchain was born.
This is where the tokenization capabilities of blockchain technology come in. real-world assets into digital tokens that can be traded on blockchain-based platforms, blockchain solves the technical challenges of the past. This approach to tokenization is not only cost-effective and scalable, but it also does so in a way that ensures full transparency.
Blockchain-based tokens ensure that the provenance of the asset linked to them cannot be forged. This ensures that audibility, security and authenticity are no longer a concern for regulators and other players engaged in this market. In addition to each token being identifiable and traceable without the need to trust any particular authority, blockchain can also increase liquidity substantially.
In its report “Blockchain-enabled digital tokenization is poised to transform commerce,” KPMG highlighted how “by creating more liquidity using blockchain tokens, value transfer is accelerated.” As HSBC’s “The 10x potential of tokenization” report points out, the splitting introduced by blockchain tokenization “has the potential to give create a new group of investorscreating increased accessibility and expanding the universe of investment options available.
The panel “Crypto: A Better Capital Market for Real-World Assets” was moderated by the founder of CryptoOracle Lou Kerner sat down with the co-founder and CEO of Souq JonPaul Vega and co-founder and CEO of Maple Sidney Powell. Hosted by this year's edition of Grit Daily House at Consensus, the panel covered topics including the unique challenges and opportunities of tokenization, the role regulation must play, and how their startups are helping build better capital markets.
For more on what this panel of experts had to say about the past, present, and future of NFTs, be sure to watch the video below or on Grit Daily. official youtube channel!
Juan Fajardo is News Desk Editor at Grit Daily. He is a software developer, technology and blockchain enthusiast, and writer, fields in which he has contributed to several projects. A jack-of-all-trades, he was born in Bogota, Colombia, but currently lives in Argentina after having traveled extensively. Always with a new interest in mind and a passion for entrepreneurship, Juan is an editor at Grit Daily where he covers everything related to the world of startups.