Billions to Trillions: Crypto Assets and the Inevitability of Digitization

The following article originally appeared in Institutional Crypto by CoinDesk, a free newsletter for the institutional market, with news and views delivered every Tuesday.

Behind the scenes, the next market is already kicking into gear as it becomes clear to all major players that not only is digitization of money on the way, but also digitization of ownership of assets, a significantly bigger financial market with massive global social and economic implications.

We split into round tables, and each table was tasked with rating the advantages of digitizing securities by importance: increased liquidity, efficiency, cost, post-trade streamlining, asset prices, fractional ownership, speed, global access, new financial products, business models etc.

Public markets are more efficient - they have electronic records of ownership, but it is still not a digital item.

Ownership essentially becomes a digital value which can be broken down into smaller parts that can flow instantly all over the world.

The main feature of digitization is not that securities are stored in 0s and 1s, it's that digitized securities can flow instantly on global networks.

The ownership equivalent: ICOs - just like music sharing 20 years earlier, it was developers who realized the potential of tokens to connect people directly and change the rules of the fund raising game, and also similarly, it only took authorities two years to fight back and enforce regulations.

Ownership can flow, like songs - think about a Spotify-like app that gives every user access to every single asset in the global market.

Music is a market worth tens of billions of dollars; ownership in general encompasses hundreds of trillions of dollars.

At the bottom of all these asset classes, one truth remains: ownership is still data and is still about who has rights to what - that can now finally be digitized.