Blockchain News

Tokenization will bring desirable stability to emerging markets


One of the biggest challenges emerging markets face is volatility. Fueled by political and economic instability, dependency on a limited number of industries, and constraints on market accessibility, these matters are exacerbated by a bad or nonexistent regulatory framework. While it doesn’t appear that many of these elements will change anytime soon, there are financial and technological implementations that can be introduced to provide stability. Tokenization — a relatively novel, blockchain-based, cryptographic ratification of assets — can be the vehicle that empowers this vision to be realized.

What emerging markets are missing: Participation and liquidity

Essential to a successful, mature market is more movement of assets. In other words, markets need liquidity, which is partly derived from participation. If not enough people are participating, the odds are low that a security will be liquid. As a result, the market remains more stagnant, investors see higher risk, and economies then become dependent on a few strong industries to compensate, while both foreign and domestic actors are unable to generate wealth from within by other market means. In the end, more participation would lead to higher liquidity, but political-economic systems can impede progress.

Many emerging markets, although not all, also operate under political regimes that hinder financial participation, with swaths of the population unable to access a bank or an investing account remotely, limiting social mobility and liquidity as well as increasing the wealth gap.

Related: Financial inclusion, cryptocurrency and the developing world

In some oligarchies, which comprise a sizable portion of emerging markets, the lack of accessibility to finance can be purposeful, with the intent to limit political advancement and maintain political oppression.

In other cases, socioeconomic mobility is not technically restrained, but domestic issues limit opportunities for the more impoverished in one way or another. Blockchain technology has spurred the potential for a real financial revolution, though, with more potential participation and opportunity.

Related: Crypto is the revolution leading developing countries to financial inclusion

Blockchain: The democratizer for finance

The underlying concept for blockchain’s development stems from a familiar system and feeling that people in emerging markets face: centralized power and not much to do about it. The idea was to take the centralized power out of the hands of the wealthy Wall Street few, whose own whims had global market implications.

Rather than route the markets through legacy financial institutions, blockchain would route them through the people, thereby cutting out the intermediary and empowering individual people. Ultimately, empowering the people with blockchain-based finance should, theoretically, lead to more accessibility and, subsequently, participation, especially for the unbanked or financially strained.

Although the underlying blockchain technology has the power to decentralize finance, it is the digital capsules that run on it called “tokens” that are the real culprit in boosting market participation. Practically speaking, tokens can represent any sort of tradable asset, whether digital or tangible. In a 2018 report, Deloitte strongly voiced its confidence in the true potential of tokenization:

“The act of tokenizing assets threatens to disrupt many industries, in particular the financial industry, and those who are not prepared risk being left behind. […] We foresee that tokenization could make the financial industry more accessible, cheaper, faster and easier, thereby possibly unlocking trillions of euros in currently illiquid assets, and vastly increasing the volumes of trades.”

These ideas have manifested into a variety of different applications, from securities to assets as unique as art pieces, that have benefitted from the unique capacities of tokenization.

Building the foundations for participation with tokenization

Combined with cost-effective blockchain technology, tokenization offers a whole new type of flexibility that is sorely lacking in the traditional mainstream financial ecosystem. As a result, assets from traditional financial instruments like securities to unique physical items like art pieces have been tokenized.

Many in emerging-market nations are unable to afford to invest in standard assets because of the high cost. But because tokens are divisible, their assets become shareable among a group of people, allowing investors to get in on the ground with lower investments.

Rather than one person buying a property — a typically illiquid asset with a $500,000 price tag — a very large group of retail investors could collectively purchase the home as an asset via tokenization. Each investor would be free to trade their tokens easily without legal issue. What this means is that not only can retail investors previously shut out due to the high cost of assets be exposed to the market, but liquidity would also be dramatically boosted. This could translate into more fundraising opportunities, too, for small and medium businesses within emerging markets that are struggling to find investment through traditional avenues.

Moreover, the flexibility effect would be amplified by the absence of legacy intermediaries on a trustless blockchain system, which would, therefore, result in cheaper operational costs that trickle down to the investor. The system trustlessness would extend to the issue of regulations as well, where stringent — or an absence of — policies could be overcome via smart contracts that execute transactions based on real-world information, without human interference.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Derek Boirun is the founder, CEO and director of Realio. Derek is an entrepreneur with institutional experience in commercial real estate development, EB-5 capital investments and blockchain-based investing. He previously founded, and currently acts as a managing member of, the American Economic Growth Fund, an EB-5 investment platform focused on sourcing overseas capital for U.S.-based real estate projects. To date, the fund owns two regional centers, hosts over 100 investors and sponsors over $1.2 billion in total project cost.


Leave a Comment

You may also like


NFT Market: Every part You Have to Know

The next dialogue will enable you to perceive why you want NFT Market and the record of prime NFT Marketplaces.

A few years have handed in apprehensions and issues concerning the promising use instances for driving mainstream blockchain adoption. The yr 2021 would possibly spell a brand new chapter for the functions of blockchain know-how with the rising reputation of NFTs. The sale of an NFT artwork assortment by digital artist Beeple for $69 million set a totally new benchmark for NFTs.

Due to this fact, many artists, musicians, and creators together with Sophia, the AI robotic, have dived into the creation and buying and selling of NFTs. Nevertheless, an NFT market is sort of essential for itemizing your NFT and guaranteeing that it’s simply accessible for buying and selling. So, what’s the significance of {the marketplace} within the…

View More Article

Prime 5 Blockchain Safety Points in 2021

Blockchain know-how undoubtedly has many advantages, particularly cryptographic safety, albeit with a number of points. Let’s focus on the notable blockchain safety points!

Blockchain know-how has been a distinguished instance of remodeling the tenets of safety in monetary transactions and knowledge trade. It gives a singular construction for information accompanied by in-built safety qualities. Blockchain depends on the rules of consensus, decentralization, and cryptography for ensuing belief in transactions. Nevertheless, blockchain safety points have continued to bother many organizations and early adopters. 

Even well-established blockchain startups expertise troubles in blockchain safety. Moreover, many undesirable dangers hold rising within the subject of blockchain safety and create a distinguished query – ‘Is Blockchain actually safe?’ with formidable doubt concerning safety on the blockchain. The next dialogue goals to dive into an in depth overview of the varied…

View More Article

High 5 Blockchain Analytics Firms 2021

This information provides a complete evaluation of prime firms which might be taking good thing about blockchain analytics of their scope of labor.

The recognition of blockchain know-how has witnessed profound ranges of up and down through the years. Since 2019, blockchain has turn into one of the crucial priorities for organizations everywhere in the world. The world has modified fairly radically with the arrival of blockchain, particularly with the digital transformation of the financial system, enterprise buildings, and governance fashions. 

Moreover, governments and central banking establishments are contemplating the adoption of blockchain, the very factor that disrupts their chain of command. Though blockchain is so useful by way of safety and transparency, it’s nonetheless susceptible. So, the highest blockchain analytics firms come to the rescue for enterprises which might be navigating the blockchain for…

View More Article

An Introduction to zkSNARKs

Privateness is without doubt one of the most vital options that you could find within the blockchain panorama. Blockchain has been the founding platform for a lot of new ideas similar to zkSNARKs that are the cryptographic strategies for making certain privateness within the blockchain. Privateness is a crucial requirement in terms of the crypto panorama, particularly with the purposes in Zcash, a blockchain-based fee system pushed by JP Morgan Chase. 

Zcash additionally gives an method for safe authentication of purchasers to servers and is a well-liked zk-snarks instance. On the identical time, the applying of zk-snarks on Ethereum can be one of many subjects of consideration within the blockchain and crypto panorama. So, what’s zk-snark, and why is it vital now? The next dialogue dives into vital particulars about zk-snarks and their implementation. 

Enroll Now:

View More Article

Announcement: Blockchain and Information Privateness Masterclass Launched

Our group at 101 Blockchains couldn’t have been happier as we convey our newest providing in blockchain training for our learners. The brand new Blockchain and Information Privateness Masterclass course is getting reside on the web site at the moment. Claudia Di Bernardino, a TMSHELL Regulation Agency’s associate, and UN/CEFACT marketing consultant has created this course together with her vital experience in the subject material. The masterclass might be delivered as a collection of on-demand coaching classes, with the flexibleness of accessing the course presentation. 

The course presentation will help learners simply flip again to the teachings within the masterclass and reinforce their studying. Within the length of 90 minutes, the brand new masterclass on blockchain and information privateness would characteristic in-depth explanations and discourse.  Learners can navigate various facets connecting blockchain and information privateness within the course. 

Enroll Now: Blockchain and Information…

View More Article

Step By Step Information to Mint an NFT

Non-fungible – That is most likely one of the vital talked-about phrases within the area of know-how. Many are touting the arrival of non-fungible tokens of NFTs as step one in reworking the digital illustration of real-world property. NFT property have cemented their reputation in latest occasions, with many NFT artists incomes tens of millions from music, collectibles, and designs with the help of blockchain. 

So, it’s apparent for any particular person to surprise in regards to the means of NFT minting. In any case, it’s only a token, proper? Since NFTs are slowly turning into a pattern, many individuals wish to discover out mint an NFT. The next dialogue dives right into a step-by-step information for minting NFT and promoting them in your desired market. 

Enroll Now: Enterprise Blockchains Fundamentals Course

Why the Sudden Rise…

View More Article