Why tokenization fails

Despite blockchain's promises of disruption, things are looking up at the New York Stock Exchange. On July 17, 2023, two partners from consulting firm McKinsey took the stage at the New York Stock Exchange in front of dozens of government regulators and financial executives to tout the benefits of blockchain and argued that its utility goes far beyond the scandal-plagued cryptocurrency market.

Bitcoin, ether, solanium and more than 10,000 other cryptocurrencies have fallen 60% since their November 2021 peak, resulting in a $2 trillion loss in market value.Cryptocurrency platforms are often hacked and their key companies have been attacked by regulators. However, advisers''insisted that the technology behind this digital currency is still viable and has a bright future. 'It's blockchain, not cryptocurrency, and there is real utility in that,' asserted McKinsey partner Julian Sevillano.

The consultants went over the basics, defining digital terms such as "smart contracts" (transactions that are automatically executed when certain conditions are met), and explained how traditional financial assets such as stocks, bonds and real estate could be "tokenized," given a blockchain code that would allow them to be transferred around the world in seconds, rather than hours or days as they are now.

But despite all their speeches about "improving capital efficiency," "reducing''transaction costs' and 'improved compliance and transparency', there was a certain cavity in the presentation.