Billions to Trillions: Crypto Assets and the Inevitability of Digitization

Ten years after the invention of bitcoin, the general market is starting to realize – with a big push from Facebook – that digital money using blockchain technology is coming.

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.

A few weeks ago, I co-hosted a closed workshop for London City institutional investors and bankers about digital securities. 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.

When it was time to present the results, it became clear there was no consensus. Every table came up with different ordering, and within each table there was little agreement.

Following the event, I spoke to participants and realized that every person in the room was thinking about an asset class close to their own heart. Some were rating advantages for public stocks going digital, others were thinking about real estate debt, others thought of private equity.

In the big picture, the ranking doesn’t matter, because digitization is inevitable.

Securities will go digital because they can

Let’s explain, but first, here is a simplified account of what it means to digitize ownership:

Ownership is essentially data. Society agrees that owner X has rights in asset Y and protects these rights with the power of the courts and police. Like any data, ownership can be digitized.

Today, most global assets are private. To trade them, the seller and buyer go through a lengthy and expensive process, involving lawyers, accountants, etc., and then everyone signs documents which detail what rights the buyer gets. The combination of all documents across all owners is the ownership. Let’s call these documents “Analog Ownership.” Read More at CoinDesk...