Blockchain is “a technology” that can be “used for good or bad”, says Citi head of future finance
Citi Head of Future of Finance Citi Global Insights Ronit Ghose joins Yahoo Finance Live to discuss the future of the blockchain system, blockchain tokenization and crypto regulation.
Video transcription
– The blockchain may not move, investment-wise, at the speed of AI or the metaverse, but the potential for the future is immeasurable. In a recent note from Citi, they highlight the potential for tokenization via blockchain, which could reach nearly $5 trillion in value by 2030. And for more on this, we welcome Ronit Ghose, Citi Head of Future of Finance Citi Global Insights.
Thank you for joining us here today. So only broad strokes here. I remember the whole blockchain craze from 2018 or so, when anyone who put a pen to the name blockchain, if they had a share price, would immediately go to the moon, but we haven’t seen that much lately. Where is the technology now?
RONIT GHOSE: Secure. Viewers will rightly be skeptical of blockchain. We have been waiting for years. ChatGPT arrived at the end of last year and in 15 minutes got probably as many users as blockchain got in 15 years. We think this is going to change over the next two or three years, and that’s what our report, “Money, Tokens and Games,” is all about. What we argue for in our report is that blockchain is about the transfer of value. Money, possessions, similar things.
And in most parts of the world, including the US, this is regulated. And what is going to change in the coming years is that regulated institutions get involved. Wholesale institutions are getting involved in the space. There is one change, and it’s primarily going to come out of the United States. The other change coming out of Asia is the next generation of gaming. So fun, social. We’re going to see players—native players—coming up with games with Web3 components, blockchain components.
Not crypto guys, not crypto bro saying, hey, I want to build a crypto game. This will bring here games that exist. Initially in Korea, Japan and then the rest of the world, including the US, get hit games and drop in tokens. That’s what’s going to change, we think, over the next couple of years.
– I mean, we’re talking about an opportunity where Inside Partners has predicted that the global blockchain market size will be worth $227.99 billion by 2028. What is the revenue generation for companies that put out public blockchains versus a managed or private blockchain? What does that path look like right now?
RONIT GHOSE: Secure. So let’s think about the use of blockchain. So in finance, in money, digital securities. So if you build a public or a permissioned version, like a private or semi-private version of your blockchain, you have users now, big institutions saying, hey, can I try your chain? And it’s different than five or seven years ago. And why do they say that? They say that because they want to appeal to a new customer base.
If you’re a PE firm or a VC firm, you’re probably close to the max when it comes to some of the institutional investors, especially in the US. If you’re an endowment fund at a university, yes, you’ve heard about this VC thing and this PE thing decades ago. Where they want to target is retail, but especially the higher end of retail. You know, you have a few million dollars in the bank, in savings, but the ticket size of some of these investments is $3 million, $10 million. You are rich, but you do not have access to these products.
What tokenization, what blockchain allows you to do is, at a lower cost, get these alternative assets and alternative investment products out to a range of people. You know, middle class people with six figure balances, low seven figures, but not like ultra high net worth individuals. And that is what the buy side is focused on.
– And talk to us about tokenization. That is one of the aspects that I feel is very interesting here. Everything from watches to real estate. And we saw this take off with the rise of NFTs. But the timing, of course, we saw a big drop in Bitcoin prices, Ether prices, and the timing was bad. I’m just wondering, where do you see tokenization going from here? And are we seeing the rise of NFTs again from the ashes?
RONIT GHOSE: Secure. So, underlying NFTs, the tokenization technology is very interesting. Obviously, like all innovations, and we can go back to, like the growth of the railways in the US and the UK, new innovations come with bubbles, hype cycles, speculation. Sometimes, unfortunately, fraud. We have seen that with the railway. We have seen it with international trade in the 17th and 18th centuries. Railways in the 19th century. The first dot com wave.
And we’ve seen it, again, recently with some of the trickier NFT projects. Tokenization is a technology that can be applied to almost anything. In the report, we interview some people who specialize in fine wines. You know, you want to buy a good wine, but you don’t necessarily want to consume it now. Or it could be a nice whiskey. You can tokenize it. You can have– it’s like having the digital asset.
You have the receipt and say, this is mine. And then you can sell it on. And that wine or whiskey is sitting in a warehouse somewhere. You never see it. Same with art. You say, look, this Picasso is very interesting, but guess what? I don’t have 50 or 100 million dollars to blow on a painting. Maybe I can own a small fraction of it. And so whether it’s art, fine art, wine, any collectible – watches – you can symbolize. Obviously property.
– Ronit, you got me into good whiskey. See, at the end of the day, I just found out. For all that we’ve discussed with the blockchain and how this can be fed into the existing fintech infrastructure, we’ve already seen a struck feeling around the bank runs that have taken place in recent weeks here. How does blockchain remove some of the risks that have become familiar on a management site, but now reassure people about how they bank and how they engage with financial services and industry leaders who manage their money?
RONIT GHOSE: Secure. Blockchain is simply a technology, and you can use it for good or bad. Now, if you are technologically savvy today, you can take care of assets, financial or otherwise, using crypto solutions. Over time — and you know, we call this, like a lot of analysts, Web2.5 — what you’re going to see are these solutions, these Web3 solutions that merge with Web2 interfaces so that we can get it out to far more human beings .
Until recently, the average middle-aged guy like myself didn’t use these technologies. Obviously, when you get to younger demographics, there’s a much higher level of penetration, knowledge, awareness. You go to a college campus versus you go to a golf course, it’s a completely different kind of knowledge and awareness of these technologies. And what will happen in the next few years is that we will see the continued spread through existing large institutions. So consider the game example I used before.
So if you have, you know, your existing hit game studio or game platform, your users know you. You drop an element of blockchain into it to make the game better. I will be the same when it comes to money.
– Understood. Citi Head of Future Finance Citi Global Insights Ronit Ghose. Ronit, you mentioned golf. We’re going to have a little more golf talk here, so you know, maybe just stick around or at least keep the Zoom or Skype feed uploaded. You will be able to hear some of it. However, we appreciate this conversation on blockchain here this morning. Appreciate it.
