If I had to pick one technology that has shaken up the digital world in the last three years, it would undoubtedly be tokenization. This sector has experienced significant growth in a short period, and according to industry reports, it shows no signs of slowing down.
But before we dive into this article, let's go back to 2021.
A game changer
Even though COVID-19 had us all in check, the global tokenization market ignored the situation and grew a staggering 18.6%, beating almost everyone's expectations.
Some data from those years show its growth:
- Security token market: according to Security Token Group, the security token market grew by more than 400% by 2020.
- Real Estate Tokenization: According to a 2020 report by Deloitte, the global real estate tokenization market is expected to reach $1.4 trillion by 2025.
- NFTs: NFTs have experienced explosive growth. According to a report by NonFungible.com, the NFTs market grew by 299% in 2020, reaching a total transaction value of more than $250 million.
- DeFi: According to DeFi Pulse, the total value locked up (TVL) in DeFi reached $80 billion in August 2021, showing the growth of tokenization in the financial sector.
Tokenization extends its applications to various industries, from financial to IT, government, hospitality, transportation, military, and defense.
Solutions have diversified into hardware, software, and services, allowing companies to tailor this technology to their needs. It would be simpler to list the industries that have not adopted this technology.
The future of tokenization
Although COVID-19 was still wreaking havoc in 2022, the tokenization market grew at a compound annual rate of 12.5%. This increase is attributed to continuous improvements in tokenization technology and the growing need for solutions in various application areas.
This is due, in part, to the fact that several countries and governments have legalized and enabled enterprise tokenization. There is the example of the European Union, which in July 2022 took decisive steps to drive the development and adoption of tokenization and blockchain technology in financial markets.
Approving the regulation for market infrastructures based on decentralized ledger technology (DLT) has been essential in legitimizing these tools.
The outlook for the tokenization market is promising, and its growth is attributed to several factors, most notably the ease of conducting secure and efficient digital transactions. In addition, continuous improvements that enable more efficient and secure integration across various industries also play a role.
Companies looking to exploit this emerging trend will find fertile ground for innovation and growth.
