Frederik Bussler, the founder of the Security Token Alliance, says that there is a “94% chance” that the security token industry takes off.
We previously reported on Frederik Bussler, the 19-year old whiz kid who leads the Security Token Alliance. The alliance is responsible for bringing together leaders in the security token space for collaboration. Recently, he authored a blogpost where he explains his reasoning that security tokens taking off is all but certain.
Spending on Blockchain Will Go Up
One of the reasons that security tokens will be successful is because worldwide spending on blockchain is expected to grow to $11.7B by 2022. Around 90% of European and North American banks are exploring the technology, with the vast majority of investment in the technology coming from the financial sector.
Given these realities, there are four possible futures.
Security tokens have no impact. Traditional securities remain as they were.
Security tokens have liquidity and security. This is what Bussler calls the “security token paradise” future.
Security tokens become a serious threat. This would mean traditional finance would be forced to enter the market.
Security tokens become favorably regulated as securities.
Bussler’s subjective estimation is that there is a 60% chance security tokens rival traditional securities in 5 years and that there is an 85% chance that security tokens are eventually regulated as securities.
Based on these estimations, Bussler lays out his probabilities.
Business as usual comes out to 6% (1–0.6 * 1–0.85)
Security Token Paradise is 51% (60% * 85%)
Security Tokens are a serious threat is predicted to be 9% (0.6 * 0.15)
Regulation a plus for tokenization is 34% (0.85 * 0.4)
For outcomes favorable to security tokens, this ends up being a cumulative probability of 94%.
Of course, this is all Bussler’s opinion. However, please do read his full post for a well-reasoned explanation of why this will be the case.
Do you agree with Bussler’s estimations? Let us know your thoughts below.
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firms specializing in sensing, protection and control solutions.