Blockchain Reshaping the World: The Wave of Stock Tokenization Has Begun

In 2011, an article titled "Software is Eating the World" was published in the Wall Street Journal, which pointed out that software is changing the world at an unprecedented speed and scale. This assertion was made by a well-known venture capitalist and has been fully validated over the following decade.

The rapid development of the internet has given rise to numerous giant companies with a market value exceeding hundreds of billions. Today, artificial intelligence technology is starting to reshape the world in a completely new way, and there are even views that AI is consuming software itself. However, all of this seems to trace back to 2011, as many of the social platforms we widely use today experienced explosive growth that year.

As of today, it has been over a decade since the birth of blockchain technology, and we have finally ushered in the beginning of "Blockchain consumes the world," which is the substantial implementation of tokenization in the US stock market.

Although the tokenization of US stocks is not a new concept and has even been partially implemented in some defunct cryptocurrency exchanges, the current players entering the market are no longer limited to pure cryptocurrency companies, but also include mainstream players such as some well-known internet companies.

Recently, a renowned online trading platform announced the launch of stock token trading services based on a certain Layer2 network in Europe, and will tokenize equity of some unlisted companies, including the highly anticipated AI companies and space exploration enterprises. This news has caused a huge stir in the financial sector and has driven the company's stock price to a historic high.

Currently, the total market capitalization of the global cryptocurrency market is approximately $3.4 trillion, while the total market capitalization of the global stock market is about $135 trillion, which is nearly 40 times greater. In other words, the theoretical market cap for stock tokenization is $135 trillion, and as the market cap continues to grow, this upper limit will keep increasing.

However, the current market share of stock tokenization may be less than 0.1%. Only when this proportion exceeds 3% can it truly signify that the industry is experiencing explosive growth. This is precisely the future blue ocean targeted by emerging trading companies, as well as the true growth point of Blockchain technology.

If this logic is realized, the impact brought by blockchain and cryptocurrencies may be no less than the influence of "software eating the world." It is foreseeable that the next 1-2 years will be a period of wild growth in this field, with more companies entering the space, while also forcing some traditional financial service companies (TradFi) to transform; the door to this trend has already been opened.

However, the tokenization of stocks is not the endpoint of blockchain technology, but merely an important step within it. At the end of last year, a well-known figure in the industry released a proposal regarding the framework, principles, and opportunities for digital assets in the United States. He predicts that the global digital capital market is expected to grow from $20 trillion to $280 trillion, while the digital asset market (excluding Bitcoin) may grow from $1 trillion to $59 trillion.

Currently, we are facing three important turning points: first, the global craze for stablecoins, regardless of East or West; second, the continuous growth of on-chain government bonds and money market fund scales, which are the widely-discussed real-world assets (RWA); and third, the beginning of stock tokenization.

The ultimate scale mentioned by the experts refers to the market size after all these assets have been tokenized on the Blockchain, as well as the potential arrival of the true "everything on the chain" era. Although this concept has been mentioned for many years, from the highly popular STO in 2018 to the current RWA and stock tokenization, we have finally reached a critical point. Although the road ahead is still long and full of challenges, this process has already begun.

Although these data may seem a bit unrealistic now, it is as dramatic and absurd as predicting ten years ago that Bitcoin would reach $100,000. Today, Bitcoin has already surpassed the $110,000 mark and continues to set new historical highs.

In the foreseeable future, we will witness blockchain technology reshaping the form of asset presentation and the way value is transferred, while it remains to be seen whether it will also reshape the way information is transmitted. Meanwhile, AI is reshaping the way information is acquired and bringing about a productivity revolution. Today, technological innovation has once again reached the eve of an explosion.

Coincidentally, both Blockchain and AI have a background that has been lurking for over 10 years, from being ignored to being filled with bubbles, and then to a revaluation of value; perhaps it is time to welcome a new round of technological revolution.

So, who will be the next major player to enter the field of stock tokenization? We will wait and see.