Tokenization and disruption

: exploring the impact of blockchain technology on the European Union’s financial industry

Abstract

In this work, the question was investigated on how blockchain-enabled share tokenization can disrupt the incumbent operations around company shares within the financial industry of the European Union. From disruptive innovation theory, four main characteristics were derived to investigate the question. Qualitative research in the form of interviews, as well as literature research showed strong evidence for a correspondence between the tokenization of company shares and the first characteristic of disruptive innovation, meaning that the technology could be classified as a new-market or a low-market foothold. The new properties of this technology when compared to existing incumbent operations include gains on: transparency, compliance automation, efficiency, self-custody of assets, increased market liquidity, higher level of security, better fraud prevention, better and cheaper availability of financial services, and the possibility of fractional ownership of assets. The second characteristic would require the innovation to be seen as inferior by the mainstream customers, for which conflicting as well as supporting evidence was found. The same holds for the third characteristic, namely that the incumbents move along a sustaining path of innovation by only innovating in incremental steps to sustain the existing technology. The final characteristic would predict a collapse of the incumbents, insufficient supporting evidence was found to make this claim. Therefore, the most promising way in which the tokenization of shares could be disruptive is through the new- market or low-market positioning, allowing the technology to move up the market towards the mainstream customers, by focusing on the unique properties of the technology.

Date of Award	16 Oct 2023
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	René Bohnsack (Supervisor) & Arash Javad Rezazadeh (Co-Supervisor)