The World Economic Forum is here with a lowdown on the impact the blockchain technology could have in the tradition markets. Need a hint? It’s going to be massive!
According to the organization, the opportunity could be substantial for an already fast-growing crypto industry that currently has a market capitalization of around $2.3 trillion. But if things all go according to plan, we are looking at hundredfold increases.
All assets will eventually be tokenized — from stocks to bonds to commodities.
At least, this is the perspective of many crypto industry executives who predict that most, if not all, of modern finance will eventually run on these digital rails. These assets will simply be put on blockchain, as it were.
This is the thinking behind this new report from the World Economic Forum, the organization whose annual meeting in Davos, Switzerland is a gathering of the biggest names in the business.
As noted in the report:
“Many anticipate a future blurring of the lines between traditional publicly listed equities and tokenized private company shares.”
That said, there is still a long way to go before any of this blurring is commonplace, partly because of friction from incumbent financial institutions and their overseers likely to resist change.
The report continues:
“While greater digitization is inevitable, substantial headwinds may continue to limit adoption of distributed-ledger technology solutions, including limited leadership buy-in and uncertain business cases, the need for significant restructuring of business operations, challenges relating to bridging legacy systems with new solutions and perceptions about regulatory uncertainty.”
When it comes to estimating the potential size of the tradition markets that might be ripe for disruption, the 100-page report goes into the details.
The equity market is listed at $95 trillion, while the debt market is $106 trillion, securitized products are estimated at $10 trillion, derivatives at a titanic $560 trillion, securities financing divided at repurchase agreements for $4 trillion and securities lending at $2.9 trillion.
Asset management and fund administration round things up at $89 trillion.
It all comes down to a total of $866.9 trillion.
Sweet.
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