WEF Davos 2024: Digital Assets and the Tokenization Debate
It’s the final day of the World Economic Forum (WEF) held in Davos-Klosters between 14-19 January 2024 – a global event bringing together the most influential players in politics and business to discuss the upcoming trends in business.
What is Tokenization?
Unless you have been living under a rock, many will have heard it is the new buzzword circulating Wall Street. We have a hot new trend for 2024 – tokenization, when assets are converted into digital tokens.
During the WEF, a panel of industry experts discussed tokenization and how it introduces a new ownership dynamic that is hosted on a blockchain with the potential to impact multiple sectors of the economy.
Wall Street and Tokenization
There has been a strong push among Wall Street firms to ramp up their efforts to tokenize assets on the blockchain. Tokenization is when tangible and intangible assets are converted into digital tokens — everything from shares, and bonds to gold bullions, real estate as well as digital and physical art.
In March 2023, BlackRock CEO Larry Fink also commented in his annual letter to shareholders that there is operational potential of some of the underlying technologies in the digital assets space which could have exciting applications.
The tokenization of asset classes “offers the prospect of driving efficiencies in capital markets, shortening value chains, and improving cost and access for investors,” he said.
Tokenized Funds Skyrocketed to $800M Value in 2023
Tokenizing traditional assets has also caught the attention of legacy financial institutions. According to a recent report by Moody’s, the value of tokenized funds has surged from $100 million at the beginning of 2023 to approximately $800 million today.
It will be interesting to see how the tokenization trend plays out in 2024.
Hot Take: The Rise of Tokenization and Its Impact on Digital Assets
The World Economic Forum in Davos-Klosters witnessed discussions on the emerging trend of tokenization. This process involves converting assets into digital tokens, introducing a new ownership dynamic hosted on a blockchain. Wall Street firms have been actively pursuing asset tokenization, enabling the conversion of various assets into digital tokens. This move is expected to drive efficiencies in capital markets and improve accessibility for investors.
Tokenized funds have witnessed significant growth, with their value skyrocketing from $100 million to approximately $800 million in 2023. As the trend continues to gain momentum, it remains to be seen how tokenization will shape the future of digital assets and impact various sectors of the economy.
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