One of the biggest challenges emerging markets face is volatility. Fueled by political and economic instability, dependency on a limited number of industries, and constraints on market accessibility, these matters are exacerbated by a bad or nonexistent regulatory framework. While it doesn’t appear that many of these elements will change anytime soon, there are financial and technological implementations that can be introduced to provide stability. Tokenization — a relatively novel, blockchain-based, cryptographic ratification of assets — can be the vehicle that empowers this vision to be realized.
Essential to a successful, mature market is more movement of assets. In other words, markets need liquidity, which is partly derived from participation. If not enough people are participating, the odds are low that a security will be liquid. As a result, the market remains more stagnant, investors see higher risk, and economies then become dependent on a few strong industries to compensate, while both foreign and domestic actors are unable to generate wealth from within by other market means. In the end, more participation would lead to higher liquidity, but political-economic systems can impede progress.
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