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  • AutorenbildMako Muzenda

How tokenisation will shape the future of finance

The concept of money and financial services are not static. From the earliest days of barter trading and the creation of systems to loan grain to farmers and traders, to the creation of the modern-day banking and financial system in Italy, ownership, storage of value and means of exchange and payment in finance have changed with the advent of new technologies and their applications. With the modern era characterised by the integration of digital technologies into all aspects of society, tokenisation has the potential to be the next big shift in global finance and trade.

Tokenisation is the process where digital rights in the form of a token are added onto a blockchain. These tokens (also known as digital asset tokens) are units of value that represent a real-world asset, which can then be exchanged on the blockchain. However, as with all things in technology, this is not a static definition. As tokens are a relatively new technology, there are new usages and definitions of tokens being developed and implemented. The most well-known tokens are Non-fungible Tokens (NFTs), unique tokens that guarantee ownership over digital files, usually art files.

The most exciting application of digital asset tokens is in finance. Digital technologies have already transformed financial services and trade, from credit cards and online banking to e-payments and fintech. A new transformation is growing. As a 2020 paper in the Singapore Journal of Legal Studies states: “The transformation that technology brings in the way that money is “packaged” and delivered extends also to fiat money, which may soon be represented by an electronic token by way of so-called central bank digital coins (CBDCs).” What makes CBDCs and digital currencies in general unique from traditional currency are the element of non-state money: they are not owned, controlled or wholly issued by state institutions. The benefits of tokenisation in finance have the same appeal as digital currencies:

  1. It is easier for more people to access the investment opportunities of tokenisation;

  2. The elimination of traditional financial systems means lower transaction costs and better convenience;

  3. Secure ownership rights, transparency and protection from theft and counterfeits.

Blockchain, the technology that forms the bedrock of digital currencies, is also responsible for digital tokens. From real estate and fractionalisation of assets to agriculture and entertainment, the versatility of tokenisation means that it’s more than a mere trend that will disappear as quickly as it emerged. As Raj Dhamodharan, Executive Vice President for Digital Asset and Blockchain Products and Partnerships at Mastercard puts it: “We believe that digital asset and blockchain technologies today are on a similar trajectory, one day becoming critical infrastructure for storing and moving value.” Mastercard recently announced the launch of a Multi-Token Network, a system that facilitates digital asset transactions on the blockchain. Jay Clayton, the former US Securities and Exchange Commission (SEC) Chairman has gone as far as to say that digital tokens will transform global financial systems and services.

There are still unknowns when it comes to digital asset tokens. However, the present rewards far outweigh potential future risks. As the technology behind tokenisation continues to develop, new uses for digital tokens will arise. Following a centuries-long tradition of technological advancements influence finance and the economy, digital asset tokens may soon well become a mainstay in global systems.

Additional Reading:

Avgouleas, E., & Blair, W. (2020). THE CONCEPT OF MONEY IN THE 4TH INDUSTRIAL REVOLUTION—A LEGAL AND ECONOMIC ANALYSIS. Singapore Journal of Legal Studies, 4–34.

Dhamodharan, R. (2023). Putting trust at the center of the next digital assets innovation cycle. Mastercard Newsroom. Retrieved from

Melinek, J. (2022). Former US SEC Chairman: Digital Assets Will Change Global Financial Infrastructure. Blockworks. Retrieved from

R3. (2019). Asset fractionalisation — what, why, and the future | R3. Retrieved from

Photo by Arthur Mazi on Unsplash

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