To date the vast majority of institutional tokenization initiatives have used permissioned blockchains. Duncan Moir, who is a Senior Investment Manager at abrdn and leads their digital asset business, explores why he sees the need to embrace public blockchain.
Real-world asset tokenization came to the fore in 2023. More than just a buzzword, banks, asset managers, and regulators have increasingly recognised the potential offered by representing funds and securities on-chain. The move promises greater financial democratisation, liquidity in less private markets, and reduced costs. But for tokenization to really take hold, the financial world must progress beyond proof of concept private blockchains and embrace public blockchain.
The decision to begin with private blockchain is understandable. They offer control and implementation with limited regulatory considerations; ideal as a starting point as companies educate themselves on using blockchain technology. This approach is inherently limited however, with centralisation coming at a cost.
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