Blockchain industry participants in Davos believe that digital tokens could transform the world of business and art – providing the capacity to “break down an Andy Warhol painting into a million different tokens.”
The industry professionals were speaking at a session entitled “From Token Assets to a Token Economy,” held at the annual World Economic Forum in Davos on Tuesday.
Panelists agreed that tokenization has the potential to make illiquid assets more accessible on a global scale. They also claimed such moves could democratize access to capital for business owners worldwide, but said that only regulation could mitigate the emergence of new token-associated financial risks.
Jeremy Allaire, the co-founder and CEO of America’s Circle, the operator of the USD Coin stablecoin, said that both dollars and gold have already been tokenized, and will be followed by “more complex types of assets” – namely valuable works of art, the earnings of spots stars and tokenized carbon credits.
Allaire spoke about the potential of bringing an “unprecedented level of democracy” in terms of access to capital for global business owners.
“Capital markets are very efficient, but the [number of people] who participate in them is very limited. It’s basically thousands of companies out of millions of companies. The ability to access capital as a start-up, entrepreneur […] is limited.”
Neha Narula, the Director of the Digital Currency Initiative at MIT, said that tokenization allows a “much cheaper, much faster” way to “break down a Warhol [painting] into a million different tokens […] and to do that for thousands of paintings around the world”.
Narula conceded that a number of challenges could block such tokenization drives from coming to fruition.
She elaborated, saying,
“We want to have consumer protection. We want to have market integrity. People who are issuing assets should disclose information about what exactly these assets represent.”
The MIT director added that stakeholders want to make sure that tokens are “really tied to their representation in the real world.” She said, “This requires some amount of regulation. I think we’re still writing that law for the tokenized asset world.”