- Public blockchains offer greater scalability, liquidity, and innovation potential in asset tokenization compared to private blockchains.
- The adoption of public/permissioned blockchain combines scalability with enterprise-level governance, propelling the future of on-chain finance.
In a world increasingly gravitating towards digital assets, the shift from private to public blockchains marks a pivotal transformation in institutional tokenization initiatives. Duncan Moir of abrdn, a senior figure in digital asset management, underscores the necessity of this transition for real-world asset tokenization.
This evolution, heralded in 2023, is not just a fleeting trend but a significant movement towards financial democratization, enhanced market liquidity, and cost reduction. The journey from private, proof-of-concept blockchains to embracing the expansive realm of public blockchain is a testament to the evolving financial landscape, as noted by abrdn plc.
Benefits of Public Blockchain
The allure of public blockchains lies in their potential to scale massively. Unlike their private counterparts, public blockchains facilitate asset transfers across multiple platforms, simplifying KYC processes and enhancing liquidity through centralized venues. This interoperability is crucial for creating a vibrant secondary market for trading tokenized assets.
Moreover, connecting these centralized exchanges to decentralized ones further amplifies liquidity. The self-custody feature of assets on public chains also adds to their appeal. Additionally, the intrinsic innovation drive in public blockchains, fueled by native cryptocurrency incentives, propels ongoing development and competitive edge, setting them apart from traditional financial systems.
Advantages of Public Permissioned Blockchain
For enterprises seeking the best of both worlds, the public/permissioned blockchain emerges as an optimal solution. This hybrid model combines the scalability of public blockchains with the governance and control of private systems. Enterprises can leverage these public/permissioned blockchains for larger-scale operations, enjoying network speed and capacity control, which are crucial for corporate trust and decision-making.
A notable example is abrdn’s collaboration with Hedera Hashgraph and UK-regulated digital assets firm Archax, where abrdn’s money market funds were tokenized, illustrating the practical application and future potential of this blockchain form in on-chain finance.
The Road Ahead in Asset Tokenization
The advancements in 2023 have set the stage for an even more dynamic 2024 in the realm of asset tokenization. With numerous asset managers progressing in their blockchain endeavors, the upcoming year holds promising developments in on-chain finance.
This continued evolution towards public and public/permissioned blockchains signals a new era in financial technology, one that is poised to redefine how assets are managed, traded, and secured in the digital age.