A day in the tokenized economy
By Alexander Bechtel and Nayara Callegari
How tokenization could change our everyday lives in the future.
Tokenization aims to increase the efficiency of global financial markets by bringing money and securities together as digital tokens on the same infrastructure, enabling transactions to be carried out step by step without the need for constant data reconciliation. The architects of this new world are primarily experts from fintech companies and the innovation departments of banks.
They criticize the historically grown complexity of the existing financial market infrastructure, which is a network of registers, securities accounts, and bank accounts that must be bridged for each transaction. Take, for instance, a classic purchase of shares: securities are held in the register of a central securities depository, while the money side is booked in bank or central bank systems. In order to buy a share, two completely independent ecosystems must therefore be synchronized, as they do not communicate with each other natively.
Blockchain shifts the exchange of assets for money to a shared, distributed platform: digital tokens act as a kind of title deed to the underlying asset. Ideally, this does not change the nature of the financial instrument itself; it merely changes the channels through which values are recorded, moved, and managed. The programmability of smart contracts also allows logic to be embedded directly into transactions – from simple if-then rules to complex automatisms.
A fictional day with Leo in the tokenized economy
But how would our everyday lives change in an integrated and functioning tokenized economy? To illustrate this, we accompany 21-year-old student and aspiring professional basketball player Leo through a day in a fictional world full of tokens.
Right after waking up, Leo checks his personal token dashboard on his cell phone. He has tokenized 5 percent of his potential future earnings as a professional basketball player and issued Leo tokens, which give investors the right to a share of his future income. This could pay off if Leo’s career as a professional basketball player takes off.
The token sale has been settled in stablecoins. Leo uses part of the proceeds to pay his tuition fees. Since all transactions are recorded on the blockchain, Leo token holders can see how he is using the funds in near real time.
At lunchtime, Leo drives to the sports center for his daily workout. His car has a built-in digital wallet, an in-car wallet. When parking, the car automatically pays the parking fee in stablecoins.
The parking garage itself has also been tokenized: there are parking garage tokens whose holders are entitled to a share of the revenue. As soon as Leo’s payment is confirmed, the fee is immediately divided up and distributed to the token holders – anyone who holds 1 percent of the parking garage tokens receives 1 percent of the parking fee directly into their own wallet.
After training, Leo uploads a video to a decentralized social media platform. Access to certain content is reserved for Leo token holders. Investors who missed the original Leo token offering can still buy the tokens on the secondary market, where the price fluctuates with his prospects as a player.
In the evenings, Leo works on a side project with a friend who is an asset manager. Leo has built up a following among sports fans and has an idea: to offer his community an opportunity to invest in their favorite sports companies. Since the underlying stocks are tokenized, his friend can compile a portfolio of these securities and bundle them in a blockchain-based investment vehicle.
The resulting sports equity token can be invested in directly from Leo’s followers’ wallets. This allows them to participate in a curated selection of broadly diversified sports-related companies in just a few steps.
From thought experiment to implementation
Leo’s day is deliberately portrayed as a thought experiment. For the time being, this vision remains largely a target image. The volume of tokenized assets is still negligible compared to the traditional securities traded daily worldwide. Market infrastructure, regulation, and industry practices are only just beginning to develop. Institutions need to invest in new technology, revamp processes, and integrate blockchain-based workflows into existing IT systems.
The renewal of the financial system’s rails has always been a slow, gradual process. But the direction is clear: by making assets and money programmable, seamlessly connected, and potentially enabling 24/7 settlement, tokenization lays the foundation for more efficient and transparent financial markets.
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This article was originally published in Frankfurter Allgemeine Zeitung (FAZ) in German. For the original version, click here.
Disclaimer: The contents of this article reflect the personal opinion of the authors.