Please take Web3 as seriously as you took the Internet in the early 1990s.
Written by: Ouke Cloud Chain Research Institute
Regarding the Web3 market in 2024, most people are currently optimistic. With the stabilization of macroeconomic policies, the United States and Hong Kong continue to release the benefits of crypto asset spot ETFs, coupled with the inscription craze and the approaching halving cycle, the market’s interest in Web3 and crypto assets is continuing to rise. The first wave of market conditions after the new year also gave people more surprises.
In addition to improving the market, what else can we expect in 2024? At the end of the year and the beginning of the new year, Jason Jiang, a senior researcher at Ouke Cloud Chain Research Institute, published a signed article in the Financial Times, trying to return to the essence of Web3 technology and explore from the perspective of technology and application what may be Web3 technology in the next cycle. “iPhone Moment”**.
In 2024, how to promote the large-scale application of Web3 technology?
Web3 is regarded as the next generation of the Internet, and its narrative logic is not difficult to understand. It is based on blockchain technology and integrates various other digital technologies to jointly build a freer, more credible and more open digital economy and Social form. However, due to premature and excessive financialization, users, especially those outside the Web3 circle, are easily misunderstood and often confuse crypto assets with Web3 technology.
In fact, the two are not the same: encrypted assets can be the product of pure digitalization and financialization, but Web3 technology still needs to be applied on a large scale in the real economy and society if it wants to develop in the long term. Vitalik Buterin, the founder of Ethereum, expressed a similar view in a recent article, that is, “People are increasingly realizing that uncontrolled centralization and excessive financialization are not the essence of blockchain technology.”
Vitalik published “Make Ethereum Cypherpunk Again” on December 28, 2023
The key reason why the Internet has become the most important global infrastructure of our time lies in the emergence of a large number of real-life applications, which have rapidly penetrated into every aspect of our production, life, and work.
Today’s Web3 technology also urgently needs more real-life applications and products to break the barriers between technology and users and promote its large-scale application. **Observing various innovations, Ouke Cloud Chain Research Institute believes that tokenization will become the driving force for the large-scale adoption of Web3 technology and is also the most anticipated Web3 technology keyword in 2024. **
Based on the Carlota Perez framework, 21.co believes that crypto is transitioning from a frenzy to a synergy phase.
What makes tokenization different from other existing Web3 innovations is that it provides a stronger sense of connection. The basic logic of the evolution of Internet technology is to strengthen connections. Although new islands of data and technology may continue to appear during this period, they will ultimately move towards connection and integration: connections between people, connections between people and things, and connections between things. .
As the next generation of the Internet, Web3 technology follows the same logic. However, in the past ten years or so, Web3, especially the encryption market, has always been closed, and the narrative is limited to the chain. Although there are often hundreds or thousands of times of growth, after all, it is just a cycle within the encryption ecosystem and has no real connection with reality. It wasn’t until tokenization gained renewed attention that Web3’s integration with the real world began to experience unprecedented growth. This integration allows the value of Web3 technology to begin to be reflected off the chain - tokenization changes not only the assets on the chain, but also the value transfer, settlement and storage methods of various assets in the real world, such as real estate and art. or various financial instruments and products.
The tokenized products currently issued are basically supported by off-chain assets.
Tokenized innovation, on the other hand, is more regulatory-friendly. In the past, it was difficult to regulate the encryption industry because it had been outside reality for a long time and had no rules to refer to. However, tokenization is more closely connected with reality and can be regarded as an evolutionary form of asset digitization**. As long as we grasp the real assets behind tokenization, we can find regulatory grip. In addition, banks and financial institutions currently involved in tokenization practices will also bring their capabilities and experience in the field of compliance to the field of tokenization.
In early November 2023, Hong Kong SFC issued a circular on tokenized securities.
“You should take this technology as seriously as you took the development of the Internet in the early 1990s,” Blythe Masters, the former head of commodities trading at J.P. Morgan, told Bloomberg in 2015. "**
This statement is timely now - tokenization, which is more perceptible to users, more valuable to institutions, and more friendly to regulation, is becoming an important driving force in accelerating the adoption of Web3 technology in 2024.
What is the difference between tokenization in 2024 and 2023?
We are still a long way from full adoption of tokenization and Web3 technologies, but change will continue to happen in 2024. Compared with 2023, Ouke Cloud Chain Research Institute believes that tokenization will exhibit the following characteristics:
(1) The blockchain and Web3 technologies that support tokenization will become more invisible on the back end, and innovation will be concentrated on more reality-oriented tokenized products. Blockchain technology will also be more closely integrated with existing information technology, accelerating the uploading of more real-world assets and data to the chain.
(2) More countries and regions will not only recognize the development potential of tokenization, but also accelerate the formulation of rules to adapt to tokenization innovation. Hong Kong, Thailand and Singapore have laid the foundation for tokenization practices, and their initiatives will serve as a reference for other countries and regions.
(3) The tokenization practice of traditional financial institutions will become more active in 2024, and will continue to adopt a step-by-step strategy for tokenization practice, that is, first start with tokenization of part of the process of financial products, and then move to the entire process. expand.
(4) Deposit tokenization and fund tokenization will usher in more prosperous development in 2024.
(5) Financial institutions will increasingly choose public chains for tokenization of traditional financial instruments and products. This change is in stark contrast to a few years ago, but will continue in 2024.
Blockchain Selection of Tokenized Products Issued
Of course, we still have many major events worthy of attention in 2024, such as Bitcoin halving, Ethereum Cancun upgrade, crypto asset spot ETFs… They may all bring the size and market value of the crypto market to another level. **But tokenization innovation excites us even more: it will not only allow more real assets to enter the digital space, but also enable Web3 technology to truly enter the real world, allowing the technology to exert value in real scenarios. **
2024 may be the turning point for tokenization and Web3 technology. We are looking forward to the arrival of the “iPhone moment” belonging to Web3 technology.
