27 Oct The era of tokenization — market outlook on a $24trn business opportunity

Source: medium.com

When is the right time to get involved? Might it be too early yet?

10 years after the release of Satoshi Nakamoto’s whitepaper called “Bitcoin: A Peer-to-Peer Electronic Cash System” triggering the invention of the blockchain technology, blockchain is still a very young technology with low levels of mainstream adoption. Despite its commonly agreed on disruptive characteristics, to date, we have only seen the first steps of this potential focusing on the development of basic blockchain protocols such as Bitcoin, Ethereum or EOS. If we draw the analogy to the internet we can refer the current state to the development of the HTML standard in 1993, facilitating the World Wide Web as we know nowadays. As the internet needed three development stages to unfold the Web 2.0 including companies like Facebook and Twitter, we expect the Blockchain technology taking a similar journey to a tokenized asset market of ~$24trn by 2027.
Projection of tokenized assets 2019–2027

Research and surveys from institutions such as the World Economic Forum (WEF), Deloitte or McKinsey (see table of sources for more detail) project that up to 10% of the global Gross Domestic Product (GDP) will be stored and transacted with the help of blockchain technology by 2025–27. This tipping point in mind, we ran a market simulation to determine the potential market size of a global tokenized market using a conservative approach.

For estimation purposes, we only looked at financial assets as well as real assets clustered into: listed equity, unlisted equity, other equity, bonds, home equity as well as other financial assets.

Based on certain factors such as the past performance as well as future growth expectations per asset class, we projected the market size of the individual assets from a bottom-up perspective. In a second step, we applied different assumptions of the individual rate of tokenization per asset class and finally matched our bottom-up results with the top-down research from the WEF.

Following this methodology, we project a tokenized asset market of ~$24trn of financial assets only in 2027. This does not include currently not measured (or not existing) asset classes or unidentified tokenization use cases of intangible assets (e.g. patents, usage rights), where we expect significant innovation and growth.

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