Why digital investment will come of age in 2019
This is the year that the token market will blow up
In life – and business in particular – we’re frequently told don’t believe the hype. But this saying doesn’t always ring true when it comes to emerging technologies.
For new tech to reach the mainstream it needs momentum, and this often comes in the form of a hype cycle. We’ve seen blockchain go through this process already, and now the industry is looking for solid examples that demonstrate how blockchain can truly change the way in which we operate.
One of the strongest blockchain use cases we’ve seen to date is security tokenization, and this technology has been much-hyped for the past 12-18 months. But 2019 is the year in which we will start demanding solid results from tokenizing tech, and watch it come of age.
Bursting the hype bubble
To appreciate why 2019 will be a year of realisation for security tokenization, first you have to understand how the hype cycle works. Traditionally, it can be divided into five phases:
We’ve already seen tokenization go through stages one and two; the media have discussed it at length, and most companies in the financial services industry are aware of the potential it offers their business. However, this is a double-edged sword.
While the education on the benefits of tokenization is less required, we are about to enter a trough of disillusionment. Look no further than Apple’s Steve Wozniak, who recently commented that “a lot of the blockchain ideas are really good; by coming out early they can burn themselves out by not being prepared to be stable in the long run”.
Timing is everything
Wozniak isn’t anti-blockchain; he has publicly observed that its decentralised set-up and total trustworthiness enable real implementation potential. But his comment about launching too early is very poignant when it comes to the adoption of security tokens.
During the hype, many enterprises invested money into prototype projects or proofs of concept – and some were quick to talk about their high expectations. As with any project of this nature, many of these task forces inevitably fell by the wayside, and those expectations were left looking over-inflated.
However, beyond the bluster, companies like WeOwn have been working to drive tokenization forward, by creating frameworks that enable the development of industry-changing solutions. For us, the breakthrough was the development of our own blockchain, as this has enabled us to develop a bespoke infrastructure through which assets can be tokenized. We’ve written a blog post on why we decided to build our own blockchain if you’d like to know more.
A solid use case for security tokenization
With the right foundation in place, we’ve been able to develop products and services that use tokenization to offer financial services enterprises a better way of doing things. One example of this is our Decentralised Stakeholder Register, which gives companies the power to have a direct dialogue with their investors, rather than relying on a network of intermediaries and custodians.
An even more invigorating prospect perhaps is the continued development of our Digital Marketplace, which manages the end-to-end STO lifecycle, from issuance to servicing, market making and price discovery.
By leveraging the capabilities of tokenization, we can offer enterprises a self-service platform, with out-of-the box functionality to manage investor relationships, offer voting options on the blockchain, and support them determining quorum requirements, arranging proxy voting and running AGMs.
One of the most exciting consequences of our Digital Marketplace development is that it creates opportunities for a whole new investor group. By digitizing assets, companies can offer fractional share ownership, lowering the barrier for entry, and our innovative approach to investment tends to catch the eye of Millennials – the fastest growing investor group.
Step forward stability
WeOwn is not the only company making strides forward in blockchain technology. Many of the prototype projects that we mentioned earlier are now coming to an end, and we’re beginning to enter a stage of stability. Security tokenization has emerged as one of the big game-changers when it comes to blockchain’s potential, and more industry players are building on the groundwork that companies like WeOwn have carved out.
Because of this, we will enter a new phase of productivity over the coming months, in which businesses begin to confidently implement tokenized assets. Forward-thinking developers will also look at ways in which they can innovate on the foundations already in place.
It is these new influences that will push acceptance forwards towards the slope of enlightenment, and create the conditions for tokenization to start coming of age in 2019.
Beat the crowd and be an early adopter: start using WeOwn’s Digital Marketplace.