The vision of a tokenised economy
Tokenisation involves storing money and assets as digital tokens on a blockchain. Experts see enormous potential – and new opportunities for private investors, banks and companies. Are they right?
There has been a great deal of hype about the blockchain, with experts predicting it might revolutionise entire industries. This is because the decentralised, tamper-proof database is transparent, secure and fast, as it can process payments in real-time and without cut-off dates.
In the meantime, things have quietened down around the technology but, it still offers exciting use cases with great potential. One of these is tokenisation – and the vision of a tokenised economy associated with it. At its core, assets and money are stored as digital tokens on a blockchain. Put simply, they are a digital certificate of ownership, for example, for real estate, art, stocks, bonds and even music.
Easier access to investments
A key advantage: tokens allow multiple people to own a share of something. This gives people access to investments that were previously out of reach – art or expensive real estate for instance.
The cost of tokenisation has fallen significantly over the years, explains Lidia Kurt, head of BX Digital, the emerging blockchain trading venue of the Boerse Stuttgart Group.
"While tokenisation still cost a six-figure sum in 2018, today you can get it for a few thousand euros," says Kurt. "The process is very fast: you can practically press a button and an object is tokenised. It then has an individual address on the blockchain. When you transfer it, you transmit this individual address from one party to another."
Experts agree: the market for tokenised assets is huge – even if concrete estimates vary widely. According to the Boston Consulting Group, tokenisation of global illiquid assets could be a 16 trillion dollar business opportunity by 2030. McKinsey expects that total tokenised market capitalisation could reach around 2 trillion dollars by 2030, not including cryptocurrencies like Bitcoin and so-called stablecoins like Tether. The consulting firm Roland Berger estimates the total market value of tokenised assets at more than ten trillion dollars by 2030.
Deutsche Bank is preparing itself for the opportunities of tokenisation. It seeks to obtain approval to offer custody of crypto assets, enabling the bank to generate fees from storing the crypto assets of its clients. It also settled a 300 million euro blockchain-based bond for Siemens and supported KfW with a tokenised bond. "Our legal department, compliance, IT – everyone had to get to grips with the new technology," says Tim Armbruster, Group Treasurer and Head of Financial Markets at KfW Bankengruppe. "You can't just transfer today's analogue processes 1:1 to the new technology. We also had to define completely new job profiles that didn't even exist before."
Programmability as a key feature
The concept of a tokenised economy goes far beyond the mere tokenisation of money and assets. "Once money and assets are tokenised, another key feature of this particular economy comes into play: programmability," says Sabih Behzad, Head of Digital Assets and Currencies at Deutsche Bank. “That means that payments can occur automatically, when certain conditions are fulfilled. For example, when a car enters a low emission zone, it could trigger an automatic payment.” This type of programming could also be used for much more complex cash flows.
Sabih envisions a future where financial institutions issue tokens themselves, provide marketplaces for trading in tokenised assets, and offer new lending opportunities by accepting tokenised assets as collateral. “These opportunities would benefit both private clients and businesses”, says Sabih. “This way, we can create a more efficient financial system. And given the huge growth potential that the tokenised economy offers, the role of banks will be crucial; they can ensure that the tokenised economy will be successful and safe.”
Show content of Sabih Behzad about a tokenised economy
A tokenised economy will be one in which assets can be created, traded and settled instantaneously, 24/7 – all on a fully digital basis. Instantaneous settlement means that ownership of assets transfers to the new owner in the moment the payment is made. A tokenised economy will enable individuals to fully own their digital assets such as skins in digital games and monetise them. Today gaming items are often owned by the company that made the game. Once such assets are tokenised, individuals really own them and not a third party. Further examples are a tokenised piece of art or music a private person created. In a tokenised economy one can program a tokenised song so that an artist receives a guaranteed 10% commission each time someone buys it. This is not possible today (at least not digitally). These kind of programmability opportunities are a key feature of this particular economy.
The topic of the tokenised economy is now more relevant than ever. This is due to the sharp rise of digital goods and services across various sectors including retail and gaming. It has become clear that our traditional financial processes – where assets and money move separately, often settling days later, is inadequate for the high velocity demands of the modern economy.
Video
Briefly explained: Tokenisation and Blockchain – How does it work?
Georg Berger
… works on international communications projects at Deutsche Bank. He is interested in how a tokenised economy might look like and what it would enable.
This page was published in April 2025.
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