Tokenization in 2019: Bitcoin-Built Bridge Between Cryptocurrency and Traditional Finance?

The crypto markets surge as we begin 2019 has attracted more stakeholders over the past week. Bitcoin’s performance especially is signalling a promising year for the crypto community both in terms of price as well as the expected milestones to be launched by various projects.

Based on stats, this should not quite excite the market stakeholders given BTC’s $20,000 high just a year ago. The recovery crypto markets are experiencing at the moment is eye catching but its sustainability is yet to be proven. However, crypto enthusiasts and analysts have echoed positive sentiments with hopes to avert huge bloodbaths such as the ones experienced in August & November.

Cryptocurrencies rough past can be attributed to a couple of factors including hostile market participants within the Fin Tech arena & unfriendly policies as well. Towards the end of Q4 in 2018, this mental framing seemed to be taking a new shape after rumours emerged that Facebook is looking to develop a stable coin for its ecosystem. This however yet to be confirmed by official sources from the company. Consequently, other big Fin Tech players have been forced to venture or allocate resources for blockchain & digital currencies research.

Stablecoins may lack the infrastructure adopted by cryptocurrencies (full decentralization) owing to their asset backed nature. For instance, Facebook develops a stable coin and pegs it to the US dollar; this would mean factors affecting USD would be indirectly affecting the value of Facebook’s stable coin. The idea is not far from actualization or implementation and the much awaited SEC Bitcoin ETF verdict might speed up the process of crypto involvement by multinationals. One of the main advantage of a stablecoin is its limited volatility compared to the highly volatile decentralized digital currencies.

That being said, existing cryptocurrencies that have diverse utility for network participants will still acquire a good portion of digital currency investors. This is because of the fundamental value found in DApps oriented platforms like Ethereum, the transaction power of Bitcoin within crypto and private coins for anonymity hence the likes of Monero. Facebook’s intention to provide a stablecoin for its ecosystem may have to integrate with existing platforms via advanced technology in order to capture the market more easily.

Tokenizing physical assets and recently securities is slowly creating an entry avenue for more crypto market participants. Estonia & Israel’s investors are among those who have had the privilege to trade stock fractions via a blockchain ecosystem developed to run the DX exchange. This innovation allows the tokenization of securities in a similar way land and other assets are being added to the blockchain networks. It is therefore too early to predict the downfall of crypto assets while its main contributors are working to make services offered even better and wider in variety.

Despite the regulation issues crypto is facing in different jurisdictions, it is evident that existing Fin Tech players are gradually considering its relevance. Tokenization is among the clear indicators of players trying to form a bridge between traditional financial systems with internet 3.0 as blockchain enthusiasts call it. We can therefore expect a much promising 2019 for the crypto community given the momentum in which the assets have started the year.

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