When it comes to investing their money, millennials are often left in the dust when it comes to understanding the complexities of the traditional financial markets. But now, with the wave of the future, there may be a new way for them to invest their money and increase their wealth – and it’s all thanks to blockchain-based tokenization.
At this year’s Citi Digital Money Symposium, investment bank Citi said that the market for tokenized real-world assets is estimated to reach between $4 trillion to $5 trillion by 2030 – 80 times larger than the value of such assets locked on blockchains today. In its report, “Money, Tokens and Games”, the analysts said that of the up to $5 trillion tokenized, their estimates show that $1.9 trillion will come in the form of debt, $1.5 trillion from real estate, $0.7 trillion from private equity and venture capital, and between $0.5-1 trillion from securities.
Their research suggests that private equity and venture capital funds are leading the charge and will become the most tokenized asset class, capturing 10% of its total addressable market, with real estate coming in next at 7.5%. Such tokenization aims to supersede legacy financial infrastructure with the help of technologically superior platforms and to open the door to investing in the private markets. Companies like KKR, Apollo and Hamilton Lane have already set up tokenized versions of their funds on Securitize, Provenance Blockchain and ADDX.
Blockchain tokenization negates the need for expensive reconciliation, prevents settlement failures and makes tedious operations ever more efficient. What’s more, it opens up new opportunities for millennials to get involved, who may otherwise have been shut out of investing by high asset requirements and large minimum investments.
Though it’s obvious that blockchain-based tokenization has the potential to revolutionize investments, the lack of clear legal and regulatory frameworks, standard protocols, and the lack of enthusiasm for the technology from some industry players are all huge stumbling blocks. While the Australian Securities Exchange recently reneged on their plan to implement a successful $165 million DLT project in November, Citi remains adamant that the promising technology is not dead in the water just yet.
Tokenization offers a unique, digital-first investment opportunity to millennials who may have felt intimidated by the traditional financial markets. The investment bank further argues that the current financial system has too many restrictions and bottlenecks that blockchain technology could eliminate, making it even more attractive than the existing infrastructure. Citi is confident that this “end state” of a digitally native financial asset infrastructure, reached with optimized smart contract and DLT-enabled automation capabilities, will be achievable.
In other words, with blockchain-based tokenization, millennials have the potential to ignite their real-world investment dreams and get involved in tokenizing financial assets in a way that has never been done before. Millennials have the enthusiasm and the fearlessness to take a chance on something new, and tokenization of assets is the perfect way for them to break into the investment space. Let’s see where the wave of the future takes us!
