16 trillion by 2030: Boston Consulting Group Estimates Size of Tokenized Economy

One of the innovations brought by blockchain asset tokenization is asset fractionalization, which for the first time is a functionality directly integrated into software because, as Boston Consulting Group points out, the concept of traditional asset fractionalization has existed for several years in the form of real estate investment trusts (REITs), exchange-traded funds (ETFs) or mutual funds.

This is asset fractionalization geared towards vehicles such as equity and real estate asset classes, and which, particularly in the case of ETFs, have contributed to the democratization of finance. However, it suffers from limitations. Its impact only materializes in public markets, whose efficiency and technology are already relatively advanced, but not in private markets, which operate manually. They are slow, opaque and expensive.

Moreover, the process of matching capital with investment opportunities in private markets involves several steps, starting from sourcing and qualifying investors and investment opportunities, through the initial allocation of capital to opportunities, to secondary asset trading and asset management, leading to suboptimal client experience and cost structures.

For Boston Consulting Group, blockchain asset tokenization presents an opportunity to remove many of these barriers that foster asset illiquidity, as well as the current traditional fractionalization mode. Blockchain asset tokenization allows us to "reimagine the end-to-end process of finding and matching investors with investment opportunities, and the subsequent secondary market opportunities once an investment has been made".

The firm sees the transition from traditional fractionalization to blockchain tokenization as imminent, which will broaden "the scope of asset classes, stakeholder groups and the regulatory scope of tokenization." For all these reasons, it estimates that the tokenization of illiquid assets will cover 16 trillion by 2030, equivalent to 10% of the world's GDP.

The World Economic Forum also estimated that tokenization would account for 10% of global GDP before the end of the decade, although in its case it placed the milestone 3 years earlier, in 2027.