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Tokenization: 2024 brings acceleration for digital assets

Bad Homburg, 5/29/2024
by FERI Cognitive Finance Institute
  • Strong global momentum in the digitization of assets and money
  • 2024 will be the catalyst year for progressive tokenization
  • Major financial players drive the concept of a token economy
  • FERI Cognitive Finance Institute analyses trend acceleration in the area of tokenization

The principle of tokenization is facing a new cycle of expansion. After a phase of experimentation, the digital representation of assets and money has now developed into an increasingly mature technology. The year 2024 could now bring a breakthrough for the token economy. “A potent mix of new venture capital, improved regulatory frameworks in Europe and technological advances is accelerating the tokenization of assets and money. This dynamic has the potential to fundamentally transform the traditional economic and financial system,” says Dr. Heinz-Werner Rapp, founder and head of the FERI Cognitive Finance Institute, on the occasion of a new analysis on the ‘Takeoff derTokenization’.

Token economy on course for growth

The concept of a token economy strives for a highly developed digital financial market infrastructure that overcomes inefficiencies in trading and high transaction costs. At the same time, this would enable a comprehensive change towards greater transparency and productivity in all sectors of the economy. “Token-based transactions of assets or money are no longer abstract experiments, but are already being used in practice in many industries. This increases the general acceptance of this technology,” says Dr. Michael Blaschke, blockchain expert and author of the analysis. Traditional financial institutions and crypto-native companies have recognized the potential of the technology and have successfully issued tokenized financial products on blockchains. The volume of tokenized assets is expected to expand massively from USD 600 billion in 2024 to almost USD 11 trillion in 2030, which is US dollars in 2030, which corresponds to annual growth of over 60 percent.

Takeoff of tokenization begins

2024 will be the decisive catalyst year for the upcoming era of a token economy, in which assets and money circulate equally in digital form as tokens on the blockchain. The demand for tokens in various industries, including finance, real estate, art, healthcare, supply chain and logistics, energy, education, entertainment, law and sports will increase significantly. There is a certain order to the tokenization of assets: first digital goods, then financial goods and money and finally real economic goods. “Both the traditional financial system and the blockchain scene have come to realize that traditional assets are not tokenized at the same time. Instead, this process takes place sequentially in waves, taking into account specific structures and market conditions,” explains Blaschke.

High strategic importance for investors

Now is the right time for entrepreneurs and investors to take a strategic approach to the topic. “The increasing market dynamics and expected technological advances offer both companies and investors attractive opportunities to benefit from the global trend of tokenization,” says Rapp. With a sound understanding of the underlying drivers and a careful analysis of market trends, investors could benefit from the advantages of a tokenized economy and align their portfolios accordingly.

The current analysis by the FERI Cognitive Finance Institute follows on from a comprehensive study on “Blockchain and Tokenization” from 2021. Both analyses are available in German in the download area of this page.

About FERI Cognitive Finance Institute

The FERI Cognitive Finance Institute, founded in 2016 by Dr. Heinz-Werner Rapp and headed by him to this day, is the strategic research center and creative think tank of the FERI Group, with a clear focus on innovative analyses and method development for long-term aspects of economic and capital market research. The institute uses the latest findings from areas such as behavioral economics, complexity theory and cognitive science. The institute's analyses are published regularly and are incorporated into the multi-asset strategy for which the CIO of the FERI Group, Dr. Marcel V. Lähn, is responsible.

The FERI Cognitive Finance Institute is backed by an experienced team with an interdisciplinary background, many years of research experience and specific specialist knowledge. It also has access to a high-caliber network of external experts from science and academic think tanks.

Until 2023, Dr. Heinz-Werner Rapp was the long-standing CEO and CIO of the FERI Group, for which he has worked since 1995. Rapp studied economics at the University of Mannheim and completed his doctorate on psychologically influenced investor behavior ("Behavioral Finance"). He has been involved with alternative capital market models for many years and has developed key foundations of cognitive finance theory.

FERI has been operating as an independent investment company since 1987, focusing on investment research, investment management and investment consulting. The name FERI stands for "Financial & Economic Research International".