REPLY
23.3.2023 09:01:30 CET | Business Wire | Press release
The digital asset market is growing exponentially. Thanks to blockchain technology and the new generation of operators using tokenization platforms, it is possible to turn everything that can be digitally archived into a digital asset, with recognised value and established ownership. This is what emerges from Reply's new ‘Digital Assets Trends’ research, based on the Reply SONAR platform. By analysing industry studies, scientific articles, patents, documents, and B2B content published in the last year, and integrating concrete experiences from Reply's clients, the study examines the main trends related to digital assets.
Tokenization is the first step to bringing real-world assets and financial instruments onto the blockchain, representing an opportunity especially for those of an illiquid nature (e.g., high-value art, public infrastructure, private equity). The main advantages of tokens include the construction of a peer-to-peer network without intermediaries that also serves as a decentralised network, end-to-end traceability with the possibility of proving ownership at any time, and automated record-keeping that simplifies every aspect of compliance.
"Digital assets still constitute less than 1% of the global financial system, but they have already grown exponentially and will continue this trend in the years to come," commented Filippo Rizzante, CTO of Reply. "Today, Reply is already supporting the demands of various financial institutions, as well as some major players in healthcare, energy, fashion, and public administration, in the adoption of digital assets enabled by a growing maturity of the regulatory framework and the intense work of central banks on their digital currencies."
The study essentially identifies 4 macro-categories of emerging digital assets, these are: payment tokens, non-fungible tokens (NFTs), utility tokens, and security tokens.
Payment tokens include cryptocurrencies and stablecoins. These currencies have not yet been issued by governments or other financial institutions, but are monitored and organised on a decentralised network. This network also serves as a secure ledger for each transaction, pending the first regulations that will come into force in 2024. The rapid and increased circulation of this type of asset has pushed central banks to explore their digital currencies, namely the Central Bank Digital Currencies, and the ECB has also started developing pilot projects for a digital Euro.
Non-fungible tokens are a digital representation of real assets or natively digital assets to be collected or used in virtual worlds. NFTs find application in various sectors, including asset management and the art market. Currently, they are not subject to any regulation and find the greatest potential within the metaverse.
Utility tokens allow the user to perform an action on a specific blockchain or decentralised application. They have been particularly popular for so-called initial coin offerings (ICOs), but today they are mainly used to redeem services and digital products in predefined ecosystems, such as those of cloud or online gaming.
Security tokens are a digital representation of a traditional financial instrument (stocks, bonds and derivatives). As digital assets, they offer additional benefits, including greater flexibility in the creation and distribution process for SMEs and startups. In addition to the existing security tokens that the European Investment Bank launched, the Reply SONAR platform has identified a growing interest in the tokenization of carbon credits, which concern a typically opaque and inefficient market like blockchain technology. This could revolutionise the monetary side of the life cycle of a tokenized carbon offset by tokenizing the credits.
The ‘Digital Assets Trends’ research can be downloaded here.
This study is part of the ‘Reply Trend SONAR’ series, which includes ‘Digital Experience Trends 2023’, ‘Metaverse: the potential beyond the hype’, and ‘Sustainability Trends’.
Reply
Reply [EXM, STAR: REY] specialises in the design and implementation of solutions based on new communication channels and digital media. As a network of highly specialised companies, Reply defines and develops business models enabled by the new models of AI, big data, cloud computing, digital media and the internet of things. Reply delivers consulting, system integration and digital services to organisations across the telecom and media; industry and services; banking and insurance; and public sectors. www.reply.com
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