Blockchain Changes the World: The Rise of Stock Tokenization

In 2011, an article about how software is changing the world was published in The Wall Street Journal, sparking widespread attention. The article pointed out that software is reshaping various industries at an unprecedented speed and scale.

More than a decade has passed, and we have witnessed the rapid development of the internet, giving rise to numerous tech giants with market values exceeding hundreds of billions. Today, artificial intelligence is beginning to transform the world in a brand new way, with some viewpoints suggesting that AI is replacing the position of software. However, all of this seems to trace back to 2011, a year when many popular social platforms experienced explosive growth.

More than a decade after the advent of blockchain technology, we are finally witnessing the beginning of "blockchain changing the world," a transformation that started with the actual implementation of tokenization in the US stock market.

Although tokenization of US stocks is not a new phenomenon, the current participants entering the market are no longer limited to companies in the pure cryptocurrency sector, but also include mainstream players such as well-known internet companies.

Recently, a renowned internet finance company announced the launch of stock token trading services based on a specific Blockchain network in Europe, and will tokenize the equity of several unlisted companies, including some highly regarded AI and aerospace firms. This news has caused a huge reaction in the financial circle and has driven the company’s stock price to a new high.

Currently, the total market capitalization of the global cryptocurrency market is approximately $3.4 trillion, while the total market capitalization of the global stock market is about $135 trillion, which is nearly 40 times different. In other words, the potential market size for stock tokenization is as high as $135 trillion, and as the overall market capitalization grows, this ceiling will continue to increase.

However, the current market share of tokenized stocks may be less than 0.1%. It is generally believed in the industry that only by breaking through a market share of 3% can it be said that the industry has truly ushered in explosive growth.

This is exactly the future blue ocean targeted by emerging trading companies, and it is also the true growth point of Blockchain technology. If this trend is realized, the impact brought by Blockchain and cryptocurrency may be no less than the revolutionary change of "software changing the world."

It is foreseeable that the next 1-2 years will be a rapid development period for this field. More companies will join this track, which will also compel some traditional financial service companies (TradFi) to transform. The door to this trend has already been opened and is unstoppable.

However, stock tokenization is not the endpoint of blockchain applications, but just a key step in it.

At the end of last year, a well-known figure in the industry released a proposal regarding the development of digital assets in the United States. He predicts that the global digital capital market is expected to grow from $20 trillion to $280 trillion, while the digital asset market (excluding Bitcoin) may grow from $1 trillion to $59 trillion.

Currently, we are facing three important turning points: first, the global demand for stablecoins; second, the continuous growth of the on-chain scale of government bonds and money market funds, commonly referred to as RWA (Real World Assets); and third, the beginning of stock tokenization.

The ultimate market size mentioned above refers to the total sum of all these assets after being brought on-chain, as well as the potential arrival of a true "everything on-chain" era. Although this concept has been mentioned for many years, from the hot STO (Security Token Offering) in 2018 to the current RWA and stock tokenization, we have finally reached a critical juncture. Although the road ahead is still long and full of challenges, this process has already begun.

Currently, this data may seem somewhat unrealistic, but it's just like predicting ten years ago that Bitcoin would reach $100,000, equally dramatic and incredible. And now, Bitcoin has surpassed $110,000 and continues to set new historical highs.

In the foreseeable future, we will see Blockchain reshaping the presentation of assets and the way value is transmitted. As for whether it will reshape the way information is conveyed, further observation is needed. Meanwhile, AI is changing the way information is accessed and bringing about a productivity revolution. Today, technological development is at the eve of another explosion.

Interestingly, both Blockchain and AI have undergone more than 10 years of latency in their backgrounds, from being overlooked to being filled with bubbles, and then to a redefinition of value. Perhaps, it is time to welcome the true explosion of these "disruptive technologies."

So, who will become the next significant player entering the stock tokenization field? Let's wait and see.