‘Tokenizing' an asset involves creating a digital version of it ('token') that contains all the information and digital rights related to that asset, connected in a programmable and automated way. Tokenized assets can be currencies, equities, bonds, artwork NFTs, and more.

Tokens move on blockchain networks that keep track of how many tokens each network user owns and the transactions they use them in: a blockchain is in effect a digital ledger. What sets blockchain apart from other accounting systems is that the recording and control of transactions is not the preserve of any single bank, company or individual. Instead, the ledger is managed by hundreds of thousands of interconnected computers, each of which keeps a complete copy of the record. So blockchain has several powerful features: it enables fast, secure and unmediated automated transactions, it provides traceability and transparency, and its records are immutable.

These features are of great interest to companies, governments, financial institutions and the public, as they can drive the digitalization of many sectors of society. This is shown in ‘Tokenise Europe 2025. Should Europe develop into a token economy?’, a report in which BBVA has participated. In addition to examining the benefits and current level of implementation of blockchain, the report calls for a firm commitment to digitalize the European economy and offers a vision of what it would be like in a future driven by this technology.

From organizing routines to streamlining procedures

In a society that has implemented blockchain in its daily life, ordinary people could use it to organize their routines. The 'Tokenise Europe 2025' report suggests, for example, that smart watches and refrigerators could store a user's data to know their sleep hours and daily physical activity, and the food available in the fridge, so as to recommend a suitable shopping list for the user to buy instantly with their digital wallet. In addition, a user could receive real-time updates on the best means of transportation to get to work each day based on traffic conditions, or manage a digital wallet to control all their assets and financial transactions, including payments and transfers, savings and investments.

These examples showcase the potential of this technology in the healthcare sector, with functions that go beyond connection with digital devices. “Blockchain enables the user or patient to control their data effectively and achieve a digital identity on their own terms. The user can choose the doctor they want to show their data to, and which data to show," explains Jesús Herencia, a professor specializing in blockchain technology at EAE Business School. He adds: "Exactly the same applies to a job search: the technology allows the job seeker to choose what information to show the potential employer."

Making it possible to self-manage digital identities using a blockchain is the goal of the Dalion project, run by a consortium of companies that includes BBVA. The project aims to develop a tool with which users will be able to centralize all their data and credentials in a single app, share them easily with government authorities and businesses, control the way their data is transferred, and revoke their credentials when needed. Ensuring that users have a strong, secure and decentralized digital identity will be increasingly important for building relationships between businesses, government authorities and users in the new environments that will emerge from Web3, such as the metaverse.

Blockchain is already being used to share credentials in some healthcare and education settings. The EU digital COVID certificate is a clear example: the immutability and security of a blockchain enables a person to be accredited before the relevant authority promptly and reliably. The technology proved to be the ideal solution to implement a universal vaccination pass. In the academic field, BCDiploma allows an individual to present verifiable credentials of his or her degrees at any of the 120 universities, companies and other institutions in the 18 countries where it already operates. Both use cases also point to the future potential of 'digital wallets,' which will contain users' credentials so they don’t need to create new identities and passwords every time they want to register for a public service.

"On the education side, the EBSI (European Blockchain Services Infrastructure) network was created to build solutions that include educational credentials. These certificates take away exclusive control from issuing organizations, whether public or private, and give it back to users," explains Guillem Ferrer, CEO of BITLAB Group, a global education platform that is blockchain-certified for Web3 technologies: "Blockchain also prevents CV forgery because it creates immutable records." Until now, obtaining your certificate for your degree, course or program depended on the speed of the issuing institution. Sometimes it would take months to provide the certificate. Not to mention the requirements (official translations, seals, apostilles, etc.) for validation in other countries. In this field, a blockchain allows for prompt issuance of credentials and a direct, secure access for the applicant. The validity of the qualification is validated instantly for institutions, organizations and potential employers forming part of the blockchain network created for this purpose.

Verification of information is a use case that benefits companies that apply it to supply chains in the food and automotive sectors. In vehicle-related industries, moreover, blockchain technology has applications linked to insurance, fuel payments and shared vehicles. Cabify, for example, uses blockchain technology to digitalize and map both carbon footprint measurement and carbon dioxide (CO₂) offsetting to achieve carbon neutrality.

The potential of full tokenization

For Miguel Caballero, CEO of Tutellus, a crypto community for learning, developing and investing in tokenized projects, these examples are just anecdotes compared to the potential of a leap from the use of blockchain technology to full tokenization.

“In the educational environment, for example, students always have to pay for their studies. But if the system is tokenized, they could actually earn money from studying." Caballero explains: “The more a student studies, the more they engage in class activities, the more they help their classmates or complete class projects, the more tokens they receive. It’s a sustainable business model, since the student's contribution has a positive impact on others and on the educational institution. If it’s private, it can sell more products and attract more students. If it’s public, it earns an improved reputation."

Tokenization has reached the real estate and art sectors, for example, where "access to assets has always been in the hands of the very few, because users need 300,000 euros to invest. Tokenization, however, allows for very small economic units. So with 100 euros you can invest from anywhere in the world," explains Caballero.

PwC estimates that blockchain technology has the potential to grow global GDP by about $1.7 trillion (€1.5 trillion at current exchange rates) by 2030, led by China and the United States. The European market is set to grow from $2 billion (€1.8 billion) in 2021 to $150 billion (€140 billion).

Such an imbalance between these regions proves the importance of initiatives such as 'Tokenise Europe 2025' for achieving solutions that benefit the European general public and ensure business success in a market that will dominate the future.