Faraj Abutalibov (L) and Anndy Lian
In a recent fireside chat, Anndy Lian, an intergovernmental blockchain expert and author of the book Blockchain Revolution 2030, engaged in a profound discussion on real-world tokenisation. This engaging conversation, moderated by Faraj Abutalibov, Chief Commercial Officer of the Venom Foundation, provided a deep dive into the evolving landscape of tokenisation, offering insights that resonate with both seasoned professionals and those new to the blockchain space.
Lian’s journey into the world of blockchain began in 2013 with his first Bitcoin purchase. Beyond personal involvement, his extensive experience advising governments underscores the practical application of blockchain at the highest levels of governance.
His role as a blockchain advisor to an intergovernmental group further solidifies his expertise. As an investor and fund manager holding a CMS license in Singapore, Lian brings a multifaceted perspective, enriching the fireside chat with a wealth of practical insights.
Tokenisation overview
The discussion commences with Lian providing an overview of the evolving perception of tokenisation. He notes a substantial shift from initial scepticism, especially from governments, to the current scenario where significant players, including prominent banks and governments, actively advocate for the tokenisation of Real World Assets (RWA). Lian emphasises the technological readiness for tokenisation, underlining the momentum behind the RWA wave.
His assertion on the shift in perception echoes a broader transformation in the financial and regulatory landscape. The acknowledgement from major players, traditionally cautious about emerging technologies, signifies a turning point. The active endorsement of tokenisation by influential entities not only validates its legitimacy but also sets the stage for widespread adoption. The emphasis on technological readiness is crucial, highlighting that the infrastructure and tools required for efficient tokenisation are now more accessible and robust than ever before.
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However, he introduces a critical concern that often goes unnoticed – the lack of a clear revenue model for companies engaged in tokenisation. Drawing from personal experience with a Registered Market Operator (RMO) investment, he highlights the complexities surrounding assets like properties, where achieving liquidity and establishing revenue models pose intricate challenges.
Lian’s insight into the revenue models of tokenisation ventures sheds light on a fundamental challenge in the industry. While the momentum for tokenising assets is palpable, the path to sustained profitability remains nebulous for many.
This observation prompts a critical examination of the business models associated with tokenisation, urging stakeholders to address this gap for long-term viability. His example involving a Registered Market Operator investment offers a tangible illustration, emphasising the need for innovative solutions to navigate complexities, particularly in traditionally illiquid markets like real estate.
Monetisation models
Lian delves into the monetisation models prevalent in the tokenisation space, distinguishing between established companies and startups. Larger companies with diverse income streams might find a more stable footing, but startups face hurdles in raising substantial funds due to uncertainties surrounding their revenue-generating capabilities. Here, he underscores the necessity for innovation among startups, citing examples such as the introduction of new ERC standards and novel approaches to tokenising assets.
The exploration of monetisation models unravels the varied landscape within the tokenisation space. Lian’s differentiation between established players and startups highlights the nuanced challenges each category faces. Larger companies equipped with diverse income streams possess a more resilient financial foundation.
In contrast, startups grapple with the intricacies of fundraising, compounded by uncertainties in proving their revenue-generating potential. Lian’s call for innovation becomes a rallying cry, emphasising the dynamic nature of the blockchain industry, where adaptability and novel approaches are prerequisites for success.
An interesting highlight is the success story of tokenising art, particularly through Non-Fungible Tokens (NFTs). Lian points to the added value brought to physical artworks through NFTs, presenting a compelling case for the broader integration of tokenisation in the art world.
The success story of art tokenisation, especially through the lens of NFTs, accentuates the transformative power of blockchain in traditionally non-digital domains. Lian’s emphasis on the added value of physical artworks highlights a paradigm shift in how we perceive and interact with art.
The integration of NFTs not only unlocks new revenue streams for artists but also democratises art ownership, allowing a broader audience to participate in the art market. This success story becomes a beacon for exploring similar opportunities in other industries where tokenisation can bring about significant value addition.
Challenges of tokenisation
Transitioning to the challenges hindering the widespread adoption of tokenisation, Lian and Abutalibov identify two significant hurdles: regulatory complexities and the prevailing reality. The lack of standardisation across different asset classes and varying regulations in different jurisdictions present formidable obstacles.
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The identification of regulatory complexities and the prevailing reality as significant hurdles offer a sobering reflection on the impediments to the widespread adoption of tokenisation. Lian and Abutalibov’s emphasis on the lack of standardisation across asset classes signals the need for a unified regulatory framework that accommodates the diverse nature of tokenised assets.
The jurisdictional variations compound the challenges, requiring a concerted effort from global stakeholders to streamline regulations and foster a conducive environment for tokenisation to flourish.
Lian expands on the scepticism that still exists around the necessity of tokenisation. He observes that despite technological advancements, a sizable portion of the population questions the practical utility of tokenisation, slowing down its accelerated adoption.
Lian’s exploration of scepticism unveils a crucial aspect of the adoption curve for tokenisation. Despite the undeniable technological advancements, a segment of the population remains unconvinced about the practical utility of tokenisation.
This scepticism, rooted in a lack of understanding or clarity, becomes a barrier that extends beyond regulatory challenges. Lian’s observation underscores the importance of comprehensive education and awareness campaigns to demystify tokenisation, fostering a more inclusive and informed approach to its adoption.
Potential tokenisation use cases
The conversation explores potential use cases beyond traditional assets. Lian expresses optimism about the tokenisation of carbon credits, emphasising the traceability benefits it can bring to this sector. Additionally, he notes the increasing recognition of stablecoins by government bodies, especially in the context of Central Bank Digital Currencies (CBDCs).
The exploration of potential use cases propels the conversation beyond the realms of traditional assets, opening up new vistas for tokenisation. His optimism about tokenising carbon credits underscores the broader environmental and sustainability applications of blockchain. The emphasis on traceability aligns with the growing demand for transparent and accountable solutions in sectors crucial for global well-being.
Furthermore, stablecoins and their recognition by government bodies signal a shift in the perception of digital currencies, with central banks exploring their own digital versions. This recognition not only validates the concept of stablecoins but also marks a step toward mainstream acceptance of blockchain-based financial instruments.
Future impacts on the financial industry
Looking ahead, Lian speculates on the transformative impact of tokenisation on the financial industry. Envisioning increased efficiency in transactions, he anticipates faster and cheaper money transfers if tokenisation is embraced on a large scale. Lian underscores the importance of translating technological potential into practical applications to realise these transformative benefits.
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Lian’s foresight into the future impact on the financial industry offers a glimpse into the transformative potential of tokenisation. The anticipation of increased efficiency in transactions aligns with the fundamental promise of blockchain technology.
Faster and cheaper money transfers emerge as tangible benefits, resonating with the ongoing quest for streamlined financial processes. His emphasis on translating technological potential into practical applications becomes a rallying cry for stakeholders to bridge the gap between innovation and real-world implementation, unlocking the full spectrum of transformative benefits.
Drivers of mass adoption
Considering the drivers of mass adoption, Lian emphasises the crucial role of everyday people using crypto. He envisions a “wow” moment when the retail investor base grows substantially, contributing to the next surge in crypto adoption. Drawing parallels to China’s widespread adoption of digital payments, he hopes for a similar scenario where people seamlessly use crypto for everyday transactions more effectively and economically.
His reflection on the drivers of mass adoption shifts the focus to the end-users – everyday people using crypto. The anticipation of a “wow” moment parallels the disruptive shifts witnessed in other technological revolutions. The envisaged growth in the retail investor base becomes a pivotal catalyst for the next surge in crypto adoption.
His comparison to China’s embrace of digital payments underscores the transformative power of widespread user acceptance. The aspiration for seamless crypto integration into everyday transactions highlights the need for user-friendly interfaces and widespread accessibility, laying the groundwork for a more inclusive crypto landscape.
The role of NFTs in tokenisation
Lian concludes the conversation by referencing his book, “NFT from Zero to Hero,” born out of a desire to guide friends away from potential scams in the NFT space. He aims to simplify the tokenisation of loyalty programs for companies. Contrary to the notion that NFTs are losing relevance, Lian points to successful projects like Oracle Red Bull Racing’s NFTs as evidence of the continued vitality of the NFT space.
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His conclusion encapsulates the multifaceted role of NFTs in tokenisation. His book not only reflects a personal commitment to guiding others but also underscores the need for education in navigating the dynamic NFT space. The simplification of tokenising loyalty programs emerges as a practical application of NFTs in the corporate realm, showcasing their versatility beyond the art and gaming sectors.
Lian’s debunking of the notion that NFTs are losing relevance becomes a testament to their enduring impact, with successful projects like Oracle Red Bull Racing’s NFTs serving as proof of concept. Far from losing vitality, the NFT space continues to evolve and find new applications, contributing to the ever-expanding narrative of tokenisation.
In conclusion
In this fireside chat, Lian provides a nuanced perspective on the current state and future possibilities of real-world tokenisation. The challenges and opportunities discussed paint a comprehensive picture of an industry on the cusp of significant developments.
As the conversation delves into potential applications, regulatory hurdles, and the transformative impact on the financial sector, it becomes clear that real-world tokenisation is a dynamic space with immense potential yet to be fully realised.
His perspective emerges as a guiding light for industry stakeholders navigating the intricate landscape of real-world tokenisation. The challenges outlined serve as waypoints for strategic considerations, urging a proactive approach to address impediments. Simultaneously, the opportunities highlighted become beacons for innovation, signalling the untapped potential awaiting exploration.
The fireside chat, rich with insights and foresight, positions Lian as a key influencer in shaping the trajectory of real-world tokenisation, inspiring a collective journey towards unlocking its transformative power.
World Tokenisation Summit was held on the 21st of November, 2023, in Dubai. More information on the fireside chat can be found here.
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