Tokenization and The Future of Money: Improving the old, Enabling the new
And, we should thank cryptocurrency for blazing the way, but the future of finance is likely to be built on tokenization and unified ledgers.
A new paper from BIS (Bank for International Settlements) outlines a “Blueprint for the future monetary system: improving the old, enabling the new”. Within it, the authors outline how the tokenization of money and assets can be scaled out of their existing silos, and integrated with a central bank. This approach aims to provide a unified ledger that binds central bank currency, tokenized deposits, and tokenized assets into a programmable infrastructure.
Overall, the paper defines tokenization as “ the process of representing claims digitally on a programmable platform”. These allow intermediaries (such as your bank) to act on behalf of clients, without the traditional separation of messaging, reconciliation, and settlement.
The paper outlines that “crypto” (aka cryptocurrency) can be a flawed model of transacting — as it often does not have any real contact with the real world of banking. At present, most citizens still trust their banks to conduct their monetary transactions, and where cryptocurrency exchanges can still have significant risks. A loss of a private key in a digital wallet can cause someones cryptocurrency to be…
