The process of tokenization is turning heads in the world of finance, with Jenny Johnson, CEO of Franklin Templeton, one of the world’s largest asset managers, hailing it as “securitization done on steroids.” Tokenization, for the uninitiated, refers to the conversion of asset ownership rights into digital tokens on a blockchain.
In Johnson’s eyes, this fresh approach opens up intriguing new possibilities for the future of alternative investment vehicles. She emphasizes that tokenization is revolutionizing securitization – a time-tested practice of over 50 years – and holds significant potential for creating innovative, Disruptive financial instruments. The significant potentials of blockchain technology have more CEOs and companies investing in “things for the future.”
The beauty of tokenization, Johnson explains, lies in its incorporation of a payment mechanism, programmable smart contracts, and the fact that it contains a source of truth embedded in a decentralized ledger. This ensures that all rights attached to a token belong to the token owner, with full provenance and credibility provided by the embedded blockchain.
Highlighting the potential of tokenization, Johnson uses music idol Rihanna as an example. Earlier this year, Rihanna released one of her hit numbers as a nonfungible token (NFT), granting token holders a share in the song’s royalties. Enabled by innovative smart contracts and the decentralized nature of blockchain, this unprecedented move suggests a shift in the balance of power from streaming platforms to artists themselves.
Johnson’s endorsement of tokenization is reflective of a wider trend. Notably, Franklin Templeton, a $1.5 trillion asset management juggernaut, is awaiting regulatory approval in the United States for a Bitcoin exchange-traded fund (ETF).
Yet, decentralization and tokenization do pose certain challenges. The legal landscape remains uncertain, and the technology itself is still maturing.
Turning to another facet of technology, AI, it seems that these complex models might just find a solution to their massive energy consumption problem in nuclear power. Tech giant Microsoft, according to a recent job post, is exploring nuclear energy to develop AI models. Nuclear energy scores high since it produces zero carbon and greenhouse gas emissions.
However, this energy source is far from perfect. Stanford University researchers point out drawbacks such as a large carbon footprint and the risks associated with nuclear meltdowns.
In conclusion, both tokenization and AI, despite their potential drawbacks and uncertainties, seem to hold the potential to redefine the landscape of their respective industries. Whether these technologies stand the test of time is yet to be seen.
Source: Cointelegraph
