Although cryptocurrency and digital assets have been around for more than a decade now, it was only recently that they gained so significantly in popularity and started becoming mainstream. The digital assets industry has only gotten started, and in the future, one can expect a revolutionary transformation in the market.
Currently, the digital assets industry has seen unprecedented growth in the applications of blockchain technology and the tokenization of assets. Extending beyond the mere scope of cryptocurrencies, blockchain has far-fetched applications in the everyday lives of human beings.
The innovations in blockchain alone could potentially become the greatest inventions of the decade. Identity management systems, cross-border payments, smart contracts, autonomous marketplaces, decentralized information management, supply chain monitoring; are some, if not all, applications of blockchain technology that are widely recognized today.
In the future, blockchain could well transform how the world works in areas like digital voting, transparency in tax regulations and compliance, medical recordkeeping, rights of employees, equity trading, Internet-of-Things (IoT), etc.
So yes, in a nutshell, blockchain applications will bring about a revolution, but it will not be limited to that alone.
Digital assets will bring about their own breakthrough concepts and ideas as well. Here’s looking at the possibilities of digital assets in the current decade, 2020–30.
A recent study revealed, as shown by Google search trends, that since mid-2019, there has been an increased interest of the people in searching for digital assets. And this was not limited to common people alone; it also included governments and central institutions worldwide.
Indeed, the market for digital assets looks more promising than ever, with a broader pool of people and investors involved. The market is still small and only expanding, but this certainly indicates how bigger it can get in the future — from tokenization to synthetic assets, and even NFTs.
Let’s explore some of these ideas.
Tokenization of assets
Tokenization of assets is expected to be the most significant trend of the decade. Tokenization essentially means that your real assets are converted to digital assets over the blockchain to obtain the asset token.
You can divide your assets into various tokens and obtain value for them individually, resulting in fractional ownerships. As a result, when buying or selling assets like property, land, etc, you can make use of the tokenization process. It will not only result in faster settlements and increased liquidity, but reduces costs as well.
Tokenization eliminates the need for a middleman and also allows for more investors due to fractional ownership. From real estate and property to market commodities, equity shares and even physical goods, you can tokenize several physical assets. However, how further tokenization could evolve would depend on the regulations placed on it in each country.
Programmable money, enabled by the tokenization of real money into digital currency, is another sector that will see improved growth. Unlike a central authority like banks, money is controlled through smart contracts.
Bitcoin is one of the most prominent examples of programmable money. While Bitcoin has been the subject of several criticisms and even bans on crypto trading in many countries, the interest in such a digital currency has not diminished, which is why many governments across the world are now looking to launch their own Central Bank Digital Currency (CBDC).
Several banks have already introduced programmable money. For instance,only recently JP Morgan Chase announced the launch of the JPM Coin, a digital token of the bank that would be used to seamlessly settle payments between its clients.
Programmable money has several advantages such as reducing the cost of cross border or cross-currency transactions and allowing for more financial freedom.
Synthetic assets refer to a set of assets that have the same value as other assets. They may or may have the same characteristics as a different asset, but they provide the same financial benefits. Examples of synthetic assets include derivative products like futures, swaps, and options that could be combined to simulate underlying assets like stock, bonds, fiat currencies like the US dollar, commodities like gold and silver, interest rates, etc. It provides worldwide access to investors by not limiting them to their locations. The future for synthetic assets looks extremely promising as it will enable people to trade both traditional and digital assets without needing to own any commodity.
Initial Dex Offerings (IDOs), Initial Exchange Offerings (IEOs), and many more — there are several ways to raise funds for crypto or blockchain projects today. Via these methods,the capital is raised through digital tokens that are spread over a blockchain network. A digital alternative to crowdfunding, IDOs and IEOs are now used widely to raise funds for businesses and startups.
Digital assets, in their various forms, provide endless possibilities in transforming the way the world and the financial markets work.
With mass interest in cryptocurrencies increasing with each passing day, the future of digital assets looks bright. It will not only bring forward more people in the financial markets but also solve various problems related to financial inclusion and inequality. This will definitely be the decade that will be known for the transformation of digital assets. Join us at XCarnival to know more about digital assets and how you can benefit from them.