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Will the Future of Equity Tokenization Come? ── World Economic Forum Releases Latest Report

Cryptocurrency

Possibility of blockchain

The World Economic Forum (WEF), which addresses global and regional economic issues, has released a May 2021 report analyzing the potential of blockchain and decentralized ledger technologies.

The title of the report is “Digital Assets and Blockchain Technology, the Future of Capital Markets” and it covers 100 pages. It does not delve into crypto assets (virtual currency) and NFT (non-fungible tokens), but rather the use of technology in the capital markets where stocks and bonds are traded.

The blockchain technology is considered to be one of the distributed ledger technologies, but in the report, these two are collectively referred to as “DLT (Distributed Ledger Technology)”.

About future outlook

The World Economic Forum pointed out that one of the merits of DLT is that if it is introduced into the capital market, it will lead to reforms such as simplification of operations. He analyzed the degree of change in the market, saying that the future outlook is uncertain.

Source: World Economic Forum

According to the analysis of the above image, if the influence of technology is the least, the use of DLT and smart contracts will not spread and the current centralized market will continue.

He argued that DeFi (decentralized finance) would become the mainstream if the market changed the most. It is said that major changes will occur as companies that provide market infrastructure and intermediaries such as banks are no longer needed.

For example, he explained that the means of issuing shares on the blockchain will bring about a huge change in the current stock market. By listing shares directly on the public blockchain, many processes could be omitted.

On the other hand, although digitization of the market is inevitable, he pointed out that there are many obstacles to the introduction of DLT. The introduction may be limited due to the time-consuming connection between the existing system and the new solution, and the need for major operational changes.

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