The CEO of BlackRock Knows Something About Tokens that You Don’t

BlackRock, the largest asset manager ever created with currently 8 trillion in assets under management, is joining the future of tokenization as are the other major fund managers and financial market players. Issuing and managing tokens requires efficient, rapidly deployable, customizable platforms with low operating costs.

New securities markets based on tokens and blockchain technology

BlackRock CEO Larry Fink recently said during the DealBook Summit that "the next generation for the markets, the next generation in financial securities, will be the tokenization of securities." Fink went on to describe the main advantages for his firm of using blockchain technology, such as instant settlement, reduced intermediaries and "dramatically reduced fees."

If you're wondering how a company like BlackRock can praise blockchain technology so openly just as serious scandals rock the cryptocurrency world, you're probably confusing blockchain technology with cryptocurrencies. The reality is that while cryptocurrencies are based on blockchain technology, so is a growing portion of traditional finance, with no relation to crypto beyond the use of blockchain.

At Token City we apply blockchain technology to the world of traditional finance, tokenizing assets in strict compliance with current regulations and, as the statements of BlackRock's CEO show, we are not alone. BlackRock, JPMorgan, Goldman Sachs, Citi and many other corporations are actively working on asset tokenization, as are a growing number of startups. We are creating a world where assets from the real world are represented by tokens in the digital world.

That's why Token City has all the necessary tools for any company, financial or not, to immediately start tokenizing and generating alternative financing, with more than affordable costs.

What is a token and what financial assets can be represented by tokens?

Blockchain technology offers a vast array of opportunities for these asset classes, since by tokenizing them we digitize their lifecycle, greatly improving cost and time efficiencies. These efficiencies are at the heart of what it means to apply tokens to the regulated financial system.

But asset tokenization not only allows us to reduce costs, speed up times and disintermediate processes, it also allows us to broaden the scope of investment, eliminating barriers to entry by allowing the fractionation of assets. An investor may not have the funds to own an entire building, but they may have the funds to own a small portion of the token representing that ownership.

Part of the appeal of cryptocurrencies is that it is an unregulated space, where companies can act quickly and allow customers to enter a new (and potentially dangerous) landscape of opportunity. There are plenty of opportunities to make money, but scams and fraudulent activity abound as well, even by some of the more established players in the industry.

The difference between DeFi and traditional finance

Still, the promise of the crypto world and DeFi lies in enabling an alternative, fully decentralized financial system, where participants transact and exchange assets by interacting with a protocol, rather than relying on intermediaries (Web 3.0).

DeFi and cryptocurrencies exist entirely in parallel to tokenization in traditional finance, where controls and regulations hold economic actors accountable, and financial experiments are conducted in controlled environments known as regulatory sandboxes.

Most participants in the DeFi space expect to remain deregulated, while the traditional financial sector is calling for clear and adequate regulation to enable the mass tokenization of assets and their lifecycles, with the goal of addressing very specific problems and eliminating inefficiencies to create value and attract customers through the use of tokens.

That's what Larry Fink, CEO of BlackRock, is talking about, and that's what we're doing at Token City. Little by little the general public is discovering that the application of blockchain at scale is happening in the realm of boring, regulated and secure finance.