Tokenization of everything is coming

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BlackRock CEO Larry Fink recently made headlines when he commented about BTC spot ETFs being “stepping stones” toward tokenization.

This week, we saw yet more evidence of the trend towards tokenization as the BIS Innovation Hub and Swiss National Bank gave more details about their planned project to tokenize promissory notes.

What were those details? The project name will be Promissa, and the proof-of-concept launch date is sometime in 2025. There have yet to be any details as to what ledger the project will use or whether it will use a public blockchain at all.

“Will it save a lot of money? Will it revolutionize the world? Probably not. But it’s a very tangible way to put the technology to work and build to order an area where you shouldn’t have paper anymore,” Cecilia Skingsley, Head of the BIS Innovation Hub, said of the project when it was announced in November 2023.

What are promissory notes, and why would tokenization help?

Promissory notes are, quite simply, promises to pay a sum of money to a designated person or entity at a date in the future or upon demand. Basically, the issuer promises to pay the holder under the agreed conditions.

Right now, promissory notes are mostly paper. However, the objective of tokenizing them isn’t mere digitization. Tokenizing the notes brings many other potential benefits, including increased liquidity, new markets for buying and selling them, fractional ownership, increased transparency, reduced administrative burden, and accessibility. Essentially, these are the usual benefits of blockchain technology.

While it’s great to see people representing BlackRock, the World Bank, and many others catching onto the benefits of tokenization, there’s still one lesson they have yet to learn; all of this will require a scalable public blockchain.

BSV is the most scalable proof-of-work blockchain

We won’t go into the reasons why proof of work (PoW) blockchains are better here. Anyone interested can read this article to see why PoW blockchains are better.

That said, it is essential that when tokenization takes off, the ledger everything is based on is infinitely scalable. After all, we’re talking about the tokenization of everything—stocks, bonds, real estate, promissory notes, and almost every other imaginable financial instrument. The buying, selling, and changing of hands of all of this will entail a staggering number of transactions per second, so the ledger will have to be able to handle it.

Right now, only the BSV blockchain can handle the sheer volume mass-scale tokenization requires. Currently processing 100,000 transactions per second for fractions of a cent, and with Teranode coming to make that millions, BSV blockchain can handle the heat. It has already showcased its chops by taking 128 million transactions in a 24-hour period, and it’s still in its infancy as far as scaling goes.

Make no mistake; for the benefits of tokenization to be realized, it will all have to happen on one ledger. There’s little point in having different ledgers for everything with centralized exchanges in the middle. Most of the benefits related to transparency, efficiency, auditability, and globally accessible markets are lost when multiple blockchains or ledgers are reintroduced. One global chain allows everyone to see everything, swap or exchange anything, and even pay any due taxes or fees on the spot.

Larry Fink, Cecilia Skingsley, and others are right that tokenization is coming and will bring massive innovation. However, I encourage them and anyone else to think it out to the end; tokenization alone is not enough. It has to be globally scalable on a single ledger, and for that to occur, there’s only one realistic option—building the future on Bitcoin SV.

Watch: Tokenizing assets on a scalable blockchain