If Robert Greifeld, the former NASDAQ CEO and chairman, is correct then by 2022, all Wall Street financial instruments as bonds, real estate and equities will be tokenized.
“100% of the stocks and bonds trading on Wall Street today COULD be tokenized, and in five years, 100% of the stocks and bonds on Wall Street WILL be tokenized” – Robert Greifeld (Former Chairman & CEO of @Nasdaq)
— 1Konto (@1_Konto) January 30, 2019
This will be massive for the crypto market and more so for token platforms as Ethereum, Tron and EOS. The only question is, will these platforms handle influx of demand from traditional Wall Street companies who often time demand quality, regulation and above all top line security? Just to put it in perspective, equities, bonds and real estate are worth an estimated $508 trillion. That’s several factors over and above the total cryptocurrency market cap hovering at around $113 billion at the time of writing.
Tokenizing $508 Trillion of Value
Even when we assume that tokenization will happen in lock steps, it means exchanges will have to build infrastructure to adequately and securely handle $914.4 billion worth of value according to Dr. Patrick Byrne, the founder of tZero and CEO of OverStock.
Obviously, this will be a big windfall for distributed ledger platforms and exchanges as tZero who claim to “revolutionize capital markets and address some of the inherent inefficiencies of Wall Street so that financial processes and investors are less beholden to traditional, institutional market structures.”
NASDAQ and Bitcoin Will Benefit
Although Bitcoin will stand to benefit because the coin will be needed to purchase these tokenized bonds, equities and real estate, the real benefactor will be mercantile exchanges including NASDAQ. As a facilitating agent that bring together buyers and sellers, it thrives in areas where there are regulations. The more visible the badger is, the more they can market themselves as one of the few approved stock trading platforms.
That’s not all, they will outright shift their liability to consumers as tokenization re-classify these instruments as Bearer securities (tokens) from Regulator securities (stocks). The former means the bearer of the paper or “token” is the bona fide owner of the security. Therefore, at his or her volition can sell if s/he needs to.
Bearer security is ownership by possession meaning there will be no way sophisticated companies can book cook. With these assets on the ledger, crises will gradually fizzle out saving billions of tax payers money.
Even though few listed companies will be ready to accept BTC over fiat, they will still benefit from extra liquidity mostly because tokenization allow fractional shares. Furthermore, markets will be international and with deep liquidity trading will be 24 hours. Besides, there will be better regulation allowing investors to buy and sell equities transparently. Argument is, Wall Streeters favor less monitoring (and regulations) but through tokenization, the field will be leveled allowing ordinary investors to benefit from a system where rules are not bent to favor anyone.
Do you think complete tokenization will happen by 2022? Let us know in the comment section