Larry Fink says tokenization will make investing seamless as payments
BlackRock's CEO, Larry Fink believes that the tokenization of real world assets (RWAs) will make investing as seamless as mobile payments.
"Half the world’s population carries a digital wallet on their phone. Imagine if that same digital wallet could also let you invest in a broad mix of companies for the long term—as easily as sending a payment," Fink wrote in his annual letter. "Tokenization could help accelerate that future by updating the plumbing of the financial system—making investments easier to issue, easier to trade, and easier to access." — The Block
The barrier is dropping
Before we talk about tokenization, it's worth looking towards the general effects of advancements in technology over the years.
Perfected in Europe, reportedly around 1450 by German inventor Johannes Gutenberg, the printing press made way for mass literacy by enabling mass production of books and documents.
The "access barrier to knowledge" lowered.
Then came the Internet, and it's since been almost too easy to gain access to information with only a few key or button presses.
Search engines like Google have amplified this ease and generative AI today, is bringing "context" to information discovery and access. Not only do you find what you're searching for, you find it with meaning to a great extent previously requiring hours of deep research.
In finance specifically, ATMs made accessing funds held at the banks hassle-free. Digital payments, which is honorably being referenced today, made it so payments can be made on the go. One could misplace or forget a card or simply not be close to an ATM, but a mobile phone will always be in pockets, at least most of the time.
Technology has generally lowered not just cost of doing things, but access or ability to do them more easily or at a convenience.
Tokenization: solving access to financial products
Tokenized real world assets (RWAs) using blockchain as a distribution layer where investors can manage assets independently, through their wallets, are currently valued at $26.53 billion, according to data from rwa.xyz
This means that access barriers for $26.53 billion in traditional assets have just been lowered.
While the extent of access today is still limited, it is expected that has more and more assets and capital get moved on-chain, access to financial products will become, as Larry Fink described: seamless as mobile payments.
I think that it is worth noting that when it comes to tokenization, it is not just about some "open door" access to financial products that will revolutionize investing, it is the inherent fractional design of these digital assets.
When traditional assets can be traded in smaller fractions, a new found of access is enabled.
Not only is the average person having entry access, they also have "lowered cost access" where they are not priced out of opportunities.
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My Robinhood account is easier to manage that pretty much any crypto wallet .
That's expected of a custodial solution.
Sure, but that's kind of the point. There is a long way to go before tokenization will make investing more seemless than traditional methods. There are already very low access barrier options. There may be other advantages to tokenization of RWAs but lower access barriers doesn't really seem like one of them.
The keyword is "will," not that it's already gotten there. Crypto has to reach mass adoption for tokenized RWAs to become accessible in the global market.
The whole point is that the more people become aware of these decentralized assets and begin using them, the more market opportunities opens up for tokenized assets and the access barriers effectively drops.
Fink's framing of tokenization as 'investing as seamless as payments' is spot on. The infrastructure side is moving fast too — the ECB just outlined their Appia roadmap for tokenized settlement in central bank money by 2028. When both BlackRock and central banks are building for the same future, the direction is pretty clear.