Do We Really Need Tokenization?

Nope. We don’t need tokenization.

Just like once upon a time, we didn’t need the internet.

Before the web, the world worked well enough. Families wrote letters across borders. A son living abroad would sit down, write a heartfelt message, and mail it off, hoping that in two or three weeks, someone back home would read it.

Then came email.

The same message, delivered in seconds. The emotional distance collapsed. Just a modest improvement in communication, right? Nothing too groundbreaking.

And yet, that one simple shift (digitizing data and improving its transmission efficiency) quietly set off an unstoppable chain of transformation. It led to social media, real-time collaboration, remote work, home banking, streaming, autonomous vehicles, global commerce, and the rise of AI. What started as data transmission efficiency ended up reshaping the entire world.

Today, tokenization also feels like a small upgrade.

It’s about taking a financial asset (a bond, a share, a loan, a fund) and turning it into a self-contained, standardized digital token that can travel through a network of independent participants.

So what? Just a little more efficiency, right?

But like email, this is no small thing.

A tokenized asset isn’t just digitized, it's designed to operate without needing to trust intermediaries, programmable, and a lot more tamper-resistant than anything that exists today.

It becomes:

Self-contained: It carries its own rules, relevant data, and usage permissions.

Interoperable: It can move across networks, jurisdictions, and systems.

Automated: Transfers, interest payments, and compliance checks are all enforced by code.

Immutable: Rules can’t be changed behind closed doors.

Instantaneous: Settlement, ownership updates, and value transfers happen in real time without having to wait for business hours, clearing houses, or back office reconciliation.

Auditable: Every movement, every update, is transparent and verifiable.

Tokenization dramatically reduces the need for intermediaries:

Custodians? The token knows who owns it. Ownership is enforced by cryptography, and the system’s rules are written in code. There’s no need for a centralized authority to verify compliance because the smart contract of the token itself is the compliance rulebook. In traditional finance, custodians often manage not only the assets but also the cash leg of the transaction, acting as a trusted intermediary for settlement. In a fully tokenized world, that role diminishes as well. When both sides of a transaction are tokenized, the entire exchange can be executed automatically with no off-chain reconciliation or manual coordination required.

Administrators? The token knows who can interact with it, when, and how. AML and KYC are programmable to ensure whitelisting and compliance.

Auditors? Everything is already time-stamped, verifiable, and public.

And with that comes something even more powerful: fraud prevention. When the rules are enforced by code, tampering becomes practically impossible. There are no back doors. No human error. No manipulation. What you see is what you get and what executes. Period.

The importance of transparency in finance isn’t theoretical: it is historical.

The 2008 financial crisis was, in large part, caused by the opacity of the financial system. Complex derivative products and mortgage-backed securities were bundled, resold, and restructured in ways that even the issuers struggled to fully understand. Risk was mispriced. Oversight failed. Investors couldn’t see what they were buying.

Entire funds operated as black boxes.

By the time of the collapse, trillions were lost, and trust in the system was shattered.

Tokenization addresses this from the get-go. It’s not just about digitizing assets; it’s about making them transparent, auditable, and governed by code. With tokenized systems, every transaction is traceable. Every rule is visible. Every ownership change is logged.

This is not just a better user experience. It's a safer financial system.

Everything we said so far is powerful, but here’s where it really gets transformative:

When you tokenize an asset, you don’t just make it more efficient and tamper-resistant. You make it programmable and composable with other assets in the network.

That token can be used in lending protocols, trading platforms, automated market makers, automated liquidity pools, insurance contracts, escrow contracts, yield vaults, DAOs, or apps that don’t even exist yet. The most beautiful part of this is that you don’t have to build all of that. Actually, you don’t even have to imagine it. Someone else will imagine it and create it if there’s a valid use case.

You simply define the asset: its logic, its rights, its constraints. And once it exists, anyone, anywhere, can build around it (but not change it). It’s important to note that whatever gets built still has to adhere to the token’s original rules, like ownership rights, transfer restrictions, and compliance logic. The token remains the source of truth. Its integrity can’t be compromised, no matter how many layers of innovation are built on top. This can be compared to how the TCP/IP stack works, which forms the core of the Internet. A foundational set of rules for data transmission that hasn't changed in decades, yet social media, AI, streaming, and more all run on top of it. All these new applications will keep emerging, but always following the rules of the foundational stack.

That’s what makes tokenized finance both open and secure: programmable, but immutable. That’s the power of open infrastructure and standardization.

You can’t predict how far your token will go, only that it now has a life of its own.

As these tokens plug into global protocols, a new financial system emerges; one that will be:

* Real time

* Borderless

* Minimally intermediated

* Antifraud by design

* Efficient

Capital will move seamlessly, just like information today. Compliance will be automated. Markets will operate continuously. And investors will no longer have to trust a black box as they do today.

This is the internet of finance. And we’re still in the dial-up era of it.

So… Do We Really Need Tokenization?

No. We don’t need it.

But once we see what it unlocks (open infrastructure, fraud-resistant assets, programmable liquidity, global accessibility, and unstoppable innovation), we won’t be able to imagine a world without it. Something that today might be dismissed as “only an efficiency improvement” will, in time, change the financial world as we know it.

All from a “minor” improvement in efficiency.

Just like email.