A recent report from Bank of America raises important questions about the future of cryptocurrencies. It predicts that 99% of the over 26,000 existing tokens may disappear within the next decade.
Bank of America's Crypto Prediction
According to the Bank of America Global Research report, a majority of crypto assets are expected to disappear in the next ten years. This prediction is based on the evaluation of the current state of financial systems, which are said to largely rely on outdated infrastructure, creating barriers to innovation and effective capital allocation.
The Role of Tokenization in Financial Systems
The report emphasizes that tokenization involves creating digital versions of real-world assets that can be exchanged and tracked using blockchain technologies. It is anticipated that within the next five to seven years, tokenization will become more significant in both financial and non-financial sectors.
Differences between Crypto Assets and Tokenized Assets
The study also highlights the differences between 'crypto' tokens and tokenized traditional assets. It discusses that not all tokens hold equal value and utility. Crypto assets are primarily needed to support public blockchains, while tokenized assets can exist within more regulated and permissioned systems.
Bank of America's prediction concerning the decline in the number of crypto assets underscores a potential transformation of the financial system through tokenization, which may lead to a consolidation of utility towards only those projects that show strong fundamentals.
