WEF Summit 2021: In the Future, the Economy Will Be Tokenized
The World Economic Forum (WEF) held its Global Technology Governance Summit this week. On April 7, Michael Casey, Chief Content Officer at CoinDesk, moderated the session, Arrival of the Token Economy: From Art to Real Estate.
The WEF panelists discussed several different ways in which tokenization is impacting society. Abdulla Bin Touq Al Marri, the Minister of Economy of the United Arab Emirates, discussed how his country intends to utilize tokenization. New Media Artist and Director of Reeps100 Studios Harry Yeff spoke about how NFTs are popularizing the use of blockchain technology.
Finally, Sheila Warren, Head of Blockchain and Data Policy at the WEF, mentioned how tokenization might alter the concept of ownership.
The UAE’s Tokenization Plan
Minister Al Marri spoke first about how the UAE intends to utilize tokenization to finance its ambitious growth plans. He said the country hopes to double its GDP in the next ten years. To do this, the country would need to grow by 6-7% annually. The minister said the country would do this by integrating the digital economy. He stated:
“In our digital age, tokenization compliments the information-based technology as a decentralized way of capital allocation.”
Accordingly, the country is looking into the tokenization of digital assets and digital financial instruments.
The minister then spoke at length about how his country intends to utilize tokenization. He said it had three primary functions: “facilitating access to capital for issuers, facilitating access to investment for investors, and fractionalization of assets.”
Minister Al Marri said that it would play a key role in including “numerous entities in the UAE which play a pivotal role in the economy, [but] have limited access to diverse means of funding.” He also said the country would deploy a digital asset to finance its post-COVID recovery. Minister Al Marri also noted that tokens could serve as a debt issue for SMEs. Smaller investors could provide funding in exchange for tokens. Finally, he said that the UAE is “putting regulation into gear to open our economy for tokenization.”
Art Popularizing NFTs
Next, Yeff spoke about the critical role artists are playing in bringing tokenization to a broader audience. “I think artists deserve credit for innovation,” he said. Yeff noted that artists have not only been pushing the boundaries of what NFTs are capable of, they were also making them highly accessible.
Although he credits artists for their innovation, he also says they are responsible for raising awareness of the technology’s potential. He stressed the necessity of having a narrative surrounding the technology. This would be an essential component to its long-term adoption, he said.
Yeff further elaborated at the WEF Summit:
“Because many people still do not understand how this works. (..) And it’s our job as the governors of narrative to make sure that isn’t the case. That misinformation doesn’t perpetuate and we understand what the tools actually do”.
Tokenization in the Economy
Warren acknowledged both speakers’ points, that tokens have a wide array of economic use cases and that artists played a prominent role in bringing broader cultural awareness to NFTs. Following up on NFTs, she said she was excited about how they can democratize ownership of assets.
Warren highlighted an initiative at the WEF, called ‘Data for Common Purpose.’ The initiative focuses on achieving a more equitable allocation of risk and rewards of data usage across a broader set of stakeholders. Warren said that NFTs could provide an opportunity for that.
Although fractionalized ownership perhaps wouldn’t make sense for some things such as art, it could readily be applied to larger-scale assets. Things such as real estate or luxury vehicles. She pointed out that these concepts are already utilized in finance, as shares of a company are essentially fractionalized ownership. She also expressed excitement over the way governments may potentially integrate them, such as in voting rights.
“All these things are going to lead to a very profound change in the ways we think about investments,” she said. ”But in particular, the ways we think of ownership”.