Blockchain Changes the World: Stock Tokenization Opens a New Era

In 2011, an article titled "Software is Eating the World" was published in The Wall Street Journal, which argued that software is changing the world at an unprecedented speed and scale. More than a decade has passed, and we have witnessed the rapid development of the internet, leading to the birth of numerous companies with a market value exceeding hundreds of billions. Today, this viewpoint still holds, as artificial intelligence is starting to change the world in new ways, with some even suggesting that AI is eating software.

And now, more than a decade after the birth of blockchain technology, we have finally ushered in the beginning of "Blockchain Devouring the World", and this beginning is the realization of tokenization in the US stock market.

Although the tokenization of U.S. stocks is not a new phenomenon, the companies involved are no longer limited to those purely in the crypto space, but also include well-known internet companies. Recently, a well-known internet company announced the launch of stock token trading services based on a certain Blockchain network in Europe, and will tokenize equity of some unlisted companies, including several highly regarded tech firms. This news has caused a huge stir in the financial sector and has driven the company’s stock price to a historical high.

Currently, the total market capitalization of the entire cryptocurrency market is approximately $3.4 trillion, while the total market capitalization of the global stock market is about $135 trillion, a difference of nearly 40 times. In other words, the ultimate market size for stock tokenization could reach $135 trillion, and as the market capitalization continues to grow, this upper limit will keep increasing.

However, the current market share may be less than 0.1%, and only a breakthrough of 3% can be considered as the industry welcoming true explosive growth. This is precisely the future that emerging trading companies are targeting, and also the real growth point of Blockchain.

If this trend is realized, the impact brought by blockchain and cryptocurrency will be no less than "software eating the world." It is foreseeable that the next 1-2 years will be a period of rampant growth in this field, with more companies joining and forcing some traditional financial service companies to transform; the door to this trend has already been opened.

However, stock tokenization is not the end of Blockchain, but merely an important step. A well-known industry figure released a proposal at the end of last year, predicting that the global digital capital market is expected to grow from $20 trillion to $280 trillion, while the digital asset market (excluding Bitcoin) could grow from $1 trillion to $59 trillion.

Currently, we are facing three important turning points: first, the global trend of embracing stablecoins; second, the continuous growth of on-chain scale for government bonds and money market funds, which is the widely discussed tokenization of real-world assets (RWA); and third, the beginning of stock tokenization.

The ultimate scale mentioned by this industry insider refers to the market for all these assets after they are fully on-chain, as well as the potential arrival of true "everything on-chain". Although this concept has been mentioned for many years, from the bustling Security Token Offerings (STO) in 2018 to the current RWA and stock tokenization, we have finally reached a critical point. Although the road ahead is still long and full of challenges, this process has already begun.

Although these data seem somewhat unrealistic now, it is just like saying ten years ago that Bitcoin would reach $100,000, which was equally dramatic and absurd. And now, Bitcoin has surpassed $110,000 and continues to set new historical highs.

In the foreseeable future, we can see that Blockchain is reshaping the presentation of assets and the way value is transferred, whether it will reshape the way information is transmitted remains to be seen; meanwhile, AI is reshaping the way information is captured and bringing about productivity changes, and now the technology tree is on the eve of an explosion.

Interestingly, the background of these two technologies has lurked for over 10 years, from being overlooked to being filled with bubbles, and then to value reshaping. Perhaps it is time to unleash that "monster".

So, who will be the next big player to enter the field of stock tokenization? We shall wait and see.