Tokenization is taking hold. That much is settled. It is showing up in financial market clearing and settlement, payments, and in products that did not exist three years ago. What is not settled is what “tokenization” actually means.
My read: the majority of tokenization efforts are best categorized as updating existing flows between existing parties using new DLT technology. Improving flows is not the same thing as remaking a market, and the press releases rarely distinguish between the two. I recommend you parse the hype carefully as it is at or near its apex.
Regular readers will recognize the theme, and I laid out the taxonomy in 101 Update: CBDCs, Stablecoins and Tokenized Deposits, and also argued in Stablecoins: A New Model of Trust enabled by Technology that the defining innovation is the trust architecture rather than the technology, and applied it most recently to SWIFT’s blockchain announcement in Parsing the Hype.
Continue reading