Download

Jason B Bazinet

Thomas A Singlehurst, CFA

Ronald Josey

Ygal Arounian

For over 600 years, innovations spawned new forms of entertainment. The printing press (invented around 1436) unleashed book publishing. Later, radio and movies (1895), TV (1927), and video games (1958) sprung onto the scene. However, amidst all this innovation, one thing remained constant: Content creation was both curated and centralized. With the advent of the internet and smartphones, social media was born. For the first time, content creation was no longer centralized. It was distributed. As such, gatekeepers — like studio heads or masthead editors — were no longer required. Crucially, however, social media platforms — like Meta or TikTok — did not share the spoils with the content creators. They kept all the revenues for themselves. This is beginning to change. Across industries — publishing, podcasting, esports, and education — content creators are finding ways to monetize their content directly with their fans. This new ecosystem is often called the creator economy. While it barely existed five years ago, today there are over 120 million content creators. In 2022, we expect the creator economy to generate about $60 billion of revenue per year with ~9% growth per year through 2024 when it may approach $75 billion of revenue. Around half of the revenues stem from ad-based video platforms, like YouTube. The other half is spread across a wide array of industries: publishing, education, and podcasting, among others. The creators do need help, and platforms can assist. However, the platforms charge fees that can vary from less than 10% of creator’s revenues (Patreon, Spotify, and Unity) to as high nearly 85% (Roblox). The variance often depends on the value the platform provides across five functions: (1) creation, (2) hosting, (3) distribution, (4) promotion, and (5) monetization. The more functions these platforms perform, the higher the fees. Today, the creator economy is diverse, vibrant, and growing. However, across many of the creator economy platforms, a similar pattern emerges. The lion’s share of the revenue is captured by a very small portion of the content creators. Far more than 80% of the revenues are created by far fewer than 20% of the creators. In short, the Pareto principle, or 80/20 rule, does not apply. The creator economy is “winner takes most.” Going forward, we think there are three areas worth watching. First, traditional social media firms may begin to share some of the spoils with content creators. That is, platforms like Twitter may begin to emulate YouTube’s business model. Or, as Instagram and Facebook push further into e-commerce, they will create opportunities for content creators to share in the economic spoils. Second, Web 3.0 may create opportunities for creator economy platforms to leverage augmented reality, blockchain, crypto, and NFTs to alter the economics of the creator economy. These tools can help facilitate a direct relationship between content creators and fans with a diminished role for digital intermediaries. In short, Web 3.0 may help improve the economics of content creators. Third, artificial intelligence may alter the creator economy in several ways including by helping with content creation and helping brands find the right influencer or helping consumer find the right content. It will be interesting to watch. With that, let’s dig into the details.

<p>For over 600 years, innovations spawned new forms of entertainment. The printing press (invented around 1436) unleashed book publishing. Later, radio and movies (1895), TV (1927), and video games (1958) sprung onto the scene. However, amidst all this innovation, one thing remained constant: Content creation was both curated and centralized.</p>
<p>With the advent of the internet and smartphones, social media was born. For the first time, content creation was no longer centralized. It was distributed. As such, gatekeepers &mdash; like studio heads or masthead editors &mdash; were no longer required. Crucially, however, social media platforms &mdash; like Meta or TikTok &mdash; did not share the spoils with the content creators. They kept all the revenues for themselves.&nbsp;</p>
<p>This is beginning to change. Across industries &mdash; publishing, podcasting, esports, and education &mdash; content creators are finding ways to monetize their content directly with their fans. This new ecosystem is often called the creator economy. While it barely existed five years ago, today there are over 120 million content creators. In 2022, we expect the creator economy to generate about $60 billion of revenue per year with ~9% growth per year through 2024 when it may approach $75 billion of revenue. Around half of the revenues stem from ad-based video platforms, like YouTube. The other half is spread across a wide array of industries: publishing, education, and podcasting, among others.</p>
<p>The creators do need help, and platforms can assist. However, the platforms charge fees that can vary from less than 10% of creator&rsquo;s revenues (Patreon, Spotify, and Unity) to as high nearly 85% (Roblox). The variance often depends on the value the platform provides across five functions: (1) creation, (2) hosting, (3) distribution, (4) promotion, and (5) monetization. The more functions these platforms perform, the higher the fees.</p>
<p>Today, the creator economy is diverse, vibrant, and growing. However, across many of the creator economy platforms, a similar pattern emerges. The lion&rsquo;s share of the revenue is captured by a very small portion of the content creators. Far more than 80% of the revenues are created by far fewer than 20% of the creators. In short, the Pareto principle, or 80/20 rule, does not apply. The creator economy is &ldquo;winner takes most.&rdquo;</p>
<p>Going forward, we think there are three areas worth watching. First, traditional social media firms may begin to share some of the spoils with content creators. That is, platforms like Twitter may begin to emulate YouTube&rsquo;s business model. Or, as Instagram and Facebook push further into e-commerce, they will create opportunities for content creators to share in the economic spoils.</p>
<p>Second, Web 3.0 may create opportunities for creator economy platforms to leverage augmented reality, blockchain, crypto, and NFTs to alter the economics of the creator economy. These tools can help facilitate a direct relationship between content creators and fans with a diminished role for digital intermediaries. In short, Web 3.0 may help improve the economics of content creators.</p>
<p>Third, artificial intelligence may alter the creator economy in several ways including by helping with content creation and helping brands find the right influencer or helping consumer find the right content. It will be interesting to watch. With that, let&rsquo;s dig into the details.</p>

From Central to Distributed <p>The rise of the internet and smartphones has shifted the supply of entertainment from being centrally produced to a distributed model. This means creators are no longer focusing on the largest, most lucrative markets but instead can serve micro-markets and niches, leading to a &ldquo;creator economy.&rdquo;</p> 

<p>The rise of the internet and smartphones has shifted the supply of entertainment from being centrally produced to a distributed model. This means creators are no longer focusing on the largest, most lucrative markets but instead can serve micro-markets and niches, leading to a &ldquo;creator economy.&rdquo;</p>

From Central to Distributed

Creator Utilize Services to Generate Revenue  <p>Monetization in the creator economy comes from ads, subscriptions, donations, purchases, and sponsorship. The generate revenues, creators need help and often use large platform so assist in creation, hosting, distribution, promotion, and monetization.</p> 

<p>Monetization in the creator economy comes from ads, subscriptions, donations, purchases, and sponsorship. The generate revenues, creators need help and often use large platform so assist in creation, hosting, distribution, promotion, and monetization.</p>

Creator Utilize Services to Generate Revenue 

Winner Takes Most  <p>Services fees charged for creator services vary greatly by platform. A creator&rsquo;s average net revenue is inversely proportional to the number of creators that use that platform, making the creator economy highly concentrated.</p> 

<p>Services fees charged for creator services vary greatly by platform. A creator&rsquo;s average net revenue is inversely proportional to the number of creators that use that platform, making the creator economy highly concentrated.</p>

Winner Takes Most 

Sizing the Creator Economy <p>The market for the creator economy is currently around $60 billion per year and should grow nearly 9% through 2024, when it should approach $75 billion. The largest segment of the creator economy is ad-based video. Some segments of the market &mdash; podcasts, education, mobile games, Metaverse, and publishing &mdash; are poised to grow 20% or more per year.</p> 

<p>The market for the creator economy is currently around $60 billion per year and should grow nearly 9% through 2024, when it should approach $75 billion. The largest segment of the creator economy is ad-based video. Some segments of the market &mdash; podcasts, education, mobile games, Metaverse, and publishing &mdash; are poised to grow 20% or more per year.</p>

Sizing the Creator Economy

For over 600 years, innovations spawned new forms of entertainment. The printing press (invented around 1436) unleashed book publishing. Later, radio and movies (1895), TV (1927), and video games (1958) sprung onto the scene. However, amidst all this innovation, one thing remained constant: Content creation was both curated and centralized. With the advent of the internet and smartphones, social media was born. For the first time, content creation was no longer centralized. It was distributed. As such, gatekeepers — like studio heads or masthead editors — were no longer required. Crucially, however, social media platforms — like Meta or TikTok — did not share the spoils with the content creators. They kept all the revenues for themselves. This is beginning to change. Across industries — publishing, podcasting, esports, and education — content creators are finding ways to monetize their content directly with their fans. This new ecosystem is often called the creator economy. While it barely existed five years ago, today there are over 120 million content creators. In 2022, we expect the creator economy to generate about $60 billion of revenue per year with ~9% growth per year through 2024 when it may approach $75 billion of revenue. Around half of the revenues stem from ad-based video platforms, like YouTube. The other half is spread across a wide array of industries: publishing, education, and podcasting, among others. The creators do need help, and platforms can assist. However, the platforms charge fees that can vary from less than 10% of creator’s revenues (Patreon, Spotify, and Unity) to as high nearly 85% (Roblox). The variance often depends on the value the platform provides across five functions: (1) creation, (2) hosting, (3) distribution, (4) promotion, and (5) monetization. The more functions these platforms perform, the higher the fees. Today, the creator economy is diverse, vibrant, and growing. However, across many of the creator economy platforms, a similar pattern emerges. The lion’s share of the revenue is captured by a very small portion of the content creators. Far more than 80% of the revenues are created by far fewer than 20% of the creators. In short, the Pareto principle, or 80/20 rule, does not apply. The creator economy is “winner takes most.” Going forward, we think there are three areas worth watching. First, traditional social media firms may begin to share some of the spoils with content creators. That is, platforms like Twitter may begin to emulate YouTube’s business model. Or, as Instagram and Facebook push further into e-commerce, they will create opportunities for content creators to share in the economic spoils. Second, Web 3.0 may create opportunities for creator economy platforms to leverage augmented reality, blockchain, crypto, and NFTs to alter the economics of the creator economy. These tools can help facilitate a direct relationship between content creators and fans with a diminished role for digital intermediaries. In short, Web 3.0 may help improve the economics of content creators. Third, artificial intelligence may alter the creator economy in several ways including by helping with content creation and helping brands find the right influencer or helping consumer find the right content. It will be interesting to watch. With that, let’s dig into the details. From Central to Distributed <p>The rise of the internet and smartphones has shifted the supply of entertainment from being centrally produced to a distributed model. This means creators are no longer focusing on the largest, most lucrative markets but instead can serve micro-markets and niches, leading to a &ldquo;creator economy.&rdquo;</p>  Creator Utilize Services to Generate Revenue  <p>Monetization in the creator economy comes from ads, subscriptions, donations, purchases, and sponsorship. The generate revenues, creators need help and often use large platform so assist in creation, hosting, distribution, promotion, and monetization.</p>  Winner Takes Most  <p>Services fees charged for creator services vary greatly by platform. A creator&rsquo;s average net revenue is inversely proportional to the number of creators that use that platform, making the creator economy highly concentrated.</p>  Sizing the Creator Economy <p>The market for the creator economy is currently around $60 billion per year and should grow nearly 9% through 2024, when it should approach $75 billion. The largest segment of the creator economy is ad-based video. Some segments of the market &mdash; podcasts, education, mobile games, Metaverse, and publishing &mdash; are poised to grow 20% or more per year.</p>   

Getting Creative and Growing

The internet and smartphones have changed content generation from a central model to one that's more distributed. This distributed model allows for more "niche" content to be produced, leading to a "creator economy." We find that net revenues to the creator are inversely related to the number of creators on a platform, making the creator economy highly concentrated. New tools and platforms utilizing Web 3.0 and AI could help creators increase their revenue.

The Creator Economy

As businesses become more digitally connected, their exposure to cyber threats increases. Managing these risks is a complex endeavor due to the rising costs of investment in equipment, software, and cyber talent. In this report, we focus on the causes and consequences of the increase in cyber skills demand. Our first chapter highlights the factors that have increased companies’ exposure to cyberattacks, as well as the costs associated with this exposure. We highlight two notable trends that have drastically changed the landscape and importance of cybersecurity. First, the impact of geopolitics and the emergence of cyberwarfare. Second, consumers’ rising attention toward the security of their personal data. In the second chapter, we discuss how global and regional labor markets fare in the face of steep competition for cybersecurity talent. Using information extracted from the profiles of the active cyber professional population, we measure the supply of cyber skills and examine the characteristics of cyber professionals. Our spatial analysis focuses on recruitment difficulties across states and cities. In our last chapter, we turn to regulation, business strategy, and governance. We discuss the importance of compliance and how failure to comply with regulation can substantially increase the cost of a cyberattack. We evaluate the costs and benefits of strict regulatory measures and explore alternative measures. We argue that cybersecurity is a public good and that firms should implement a resilient cybersecurity defense as their social responsibility. Cyberattack costs have started to bite: Apart from the direct costs, supply chain disruptions and reputational damage can be substantial. Cyberattack exposure risks and material costs have increased significantly in the healthcare industry. Geopolitical risks and the emergence of cyberwarfare have reached new levels, disrupting production networks and causing cross-border economic damage. Consumer attention toward privacy and personal data has peaked, magnifying the impact of reputational damage for firms impacted by security breaches. Asia is now the second largest market for cyber skills, surpassing Europe. Cyber skill demand rose significantly for many managerial positions. One-tenth of cyber job postings also require data privacy knowledge. The cyber workforce is relatively young — half of all cyber professionals have less than six years of experience. Excluding North America, cyber job openings take longer than other information technology (IT) positions to fill. Stringent data breach regulations, which emerged globally through a mix of better enforcement and heftier fines, make non-compliance a non-option. Data breach regulation can induce firms to increase investment in cyber skills, but it slows down business creation and increases exit rates.

<p>As businesses become more digitally connected, their exposure to cyber threats increases. Managing these risks is a complex endeavor due to the rising costs of investment in equipment, software, and cyber talent.</p>
<p>In this report, we focus on the causes and consequences of the increase in cyber skills demand. Our first chapter highlights the factors that have increased companies&rsquo; exposure to cyberattacks, as well as the costs associated with this exposure. We highlight two notable trends that have drastically changed the landscape and importance of cybersecurity. First, the impact of geopolitics and the emergence of cyberwarfare. Second, consumers&rsquo; rising attention toward the security of their personal data. In the second chapter, we discuss how global and regional labor markets fare in the face of steep competition for cybersecurity talent. Using information extracted from the profiles of the active cyber professional population, we measure the supply of cyber skills and examine the characteristics of cyber professionals. Our spatial analysis focuses on recruitment difficulties across states and cities. In our last chapter, we turn to regulation, business strategy, and governance. We discuss the importance of compliance and how failure to comply with regulation can substantially increase the cost of a cyberattack.</p>
<p>We evaluate the costs and benefits of strict regulatory measures and explore alternative measures. We argue that cybersecurity is a public good and that firms should implement a resilient cybersecurity defense as their social responsibility.</p>
<ul>
<li>Cyberattack costs have started to bite: Apart from the direct costs, supply chain disruptions and reputational damage can be substantial.</li>
<li>Cyberattack exposure risks and material costs have increased significantly in the healthcare industry.</li>
<li>Geopolitical risks and the emergence of cyberwarfare have reached new levels, disrupting production networks and causing cross-border economic damage.</li>
<li>Consumer attention toward privacy and personal data has peaked, magnifying the impact of reputational damage for firms impacted by security breaches.</li>
<li>Asia is now the second largest market for cyber skills, surpassing Europe.</li>
<li>Cyber skill demand rose significantly for many managerial positions. One-tenth of cyber job postings also require data privacy knowledge.</li>
<li>The cyber workforce is relatively young &mdash; half of all cyber professionals have less than six years of experience.</li>
<li>Excluding North America, cyber job openings take longer than other information technology (IT) positions to fill.</li>
<li>Stringent data breach regulations, which emerged globally through a mix of better enforcement and heftier fines, make non-compliance a non-option.</li>
<li>Data breach regulation can induce firms to increase investment in cyber skills, but it slows down business creation and increases exit rates.</li>
</ul>

The Cyber Problem <p>Cyberattacks are increasing &mdash; in number, complexity, and cost &mdash; driven by geopolitics and cyber warfare. By sector, there has been a distinct surge in cyber risk in the healthcare industry and cybersecurity is increasingly becoming a concern for firms globally.&nbsp;</p> 

<p>Cyberattacks are increasing &mdash; in number, complexity, and cost &mdash; driven by geopolitics and cyber warfare. By sector, there has been a distinct surge in cyber risk in the healthcare industry and cybersecurity is increasingly becoming a concern for firms globally.&nbsp;</p>

The Cyber Problem

Rise of Demand for Cyber Skills <p>Because businesses are increasing their digital footprints at the same time cyberattacks are increasing, the need for a workforce with digital skills is growing &mdash; both regionally and by industry.</p> 

<p>Because businesses are increasing their digital footprints at the same time cyberattacks are increasing, the need for a workforce with digital skills is growing &mdash; both regionally and by industry.</p>

Rise of Demand for Cyber Skills

Supply of Cyber Skills Not Meeting Demand <p>in the U.S., job listing data indicate there is rising demand for workers with cyber skills. In 2021, the aveage U.S. state saw 2.6 cyber job postings per cyber professional. In addition, compared to IT prefessionals, the age of the cyber-related workforce is relatively younger and job postings for cyber jobs are open for longer.</p> 

<p>in the U.S., job listing data indicate there is rising demand for workers with cyber skills. In 2021, the aveage U.S. state saw 2.6 cyber job postings per cyber professional. In addition, compared to IT prefessionals, the age of the cyber-related workforce is relatively younger and job postings for cyber jobs are open for longer.</p>

Supply of Cyber Skills Not Meeting Demand

Addressing the Market Failure in the Provision of Cybersecurity <p>Exposure to cyberattacks depends on a firms' own cyber resilience as well as that of its partners and suppliers. The optimal provision of this public good can be addressed by government intervention via regulations, or by encouraging firms to integrate cybersecurity as part of the corporate social responsilbilty agenday. Demand for cyber skills rapidly increase in industries highly exposed to enforcement.&nbsp;</p> 

<p>Exposure to cyberattacks depends on a firms' own cyber resilience as well as that of its partners and suppliers. The optimal provision of this public good can be addressed by government intervention via regulations, or by encouraging firms to integrate cybersecurity as part of the corporate social responsilbilty agenday. Demand for cyber skills rapidly increase in industries highly exposed to enforcement.&nbsp;</p>

Addressing the Market Failure in the Provision of Cybersecurity

As businesses become more digitally connected, their exposure to cyber threats increases. Managing these risks is a complex endeavor due to the rising costs of investment in equipment, software, and cyber talent. In this report, we focus on the causes and consequences of the increase in cyber skills demand. Our first chapter highlights the factors that have increased companies’ exposure to cyberattacks, as well as the costs associated with this exposure. We highlight two notable trends that have drastically changed the landscape and importance of cybersecurity. First, the impact of geopolitics and the emergence of cyberwarfare. Second, consumers’ rising attention toward the security of their personal data. In the second chapter, we discuss how global and regional labor markets fare in the face of steep competition for cybersecurity talent. Using information extracted from the profiles of the active cyber professional population, we measure the supply of cyber skills and examine the characteristics of cyber professionals. Our spatial analysis focuses on recruitment difficulties across states and cities. In our last chapter, we turn to regulation, business strategy, and governance. We discuss the importance of compliance and how failure to comply with regulation can substantially increase the cost of a cyberattack. We evaluate the costs and benefits of strict regulatory measures and explore alternative measures. We argue that cybersecurity is a public good and that firms should implement a resilient cybersecurity defense as their social responsibility. Cyberattack costs have started to bite: Apart from the direct costs, supply chain disruptions and reputational damage can be substantial. Cyberattack exposure risks and material costs have increased significantly in the healthcare industry. Geopolitical risks and the emergence of cyberwarfare have reached new levels, disrupting production networks and causing cross-border economic damage. Consumer attention toward privacy and personal data has peaked, magnifying the impact of reputational damage for firms impacted by security breaches. Asia is now the second largest market for cyber skills, surpassing Europe. Cyber skill demand rose significantly for many managerial positions. One-tenth of cyber job postings also require data privacy knowledge. The cyber workforce is relatively young — half of all cyber professionals have less than six years of experience. Excluding North America, cyber job openings take longer than other information technology (IT) positions to fill. Stringent data breach regulations, which emerged globally through a mix of better enforcement and heftier fines, make non-compliance a non-option. Data breach regulation can induce firms to increase investment in cyber skills, but it slows down business creation and increases exit rates. The Cyber Problem <p>Cyberattacks are increasing &mdash; in number, complexity, and cost &mdash; driven by geopolitics and cyber warfare. By sector, there has been a distinct surge in cyber risk in the healthcare industry and cybersecurity is increasingly becoming a concern for firms globally.&nbsp;</p>  Rise of Demand for Cyber Skills <p>Because businesses are increasing their digital footprints at the same time cyberattacks are increasing, the need for a workforce with digital skills is growing &mdash; both regionally and by industry.</p>  Supply of Cyber Skills Not Meeting Demand <p>in the U.S., job listing data indicate there is rising demand for workers with cyber skills. In 2021, the aveage U.S. state saw 2.6 cyber job postings per cyber professional. In addition, compared to IT prefessionals, the age of the cyber-related workforce is relatively younger and job postings for cyber jobs are open for longer.</p>  Addressing the Market Failure in the Provision of Cybersecurity <p>Exposure to cyberattacks depends on a firms' own cyber resilience as well as that of its partners and suppliers. The optimal provision of this public good can be addressed by government intervention via regulations, or by encouraging firms to integrate cybersecurity as part of the corporate social responsilbilty agenday. Demand for cyber skills rapidly increase in industries highly exposed to enforcement.&nbsp;</p> 

Causes and Consequences of the Rise in Cyber Skill Demand

As businesses become more digitally connected, their exposure to cyber threats increases. Managing these risks is a complex endeavor due to the rising costs of investment in equipment, software, and cyber talent. In this report, we focus on the causes and consequences of the increase in cyber skills demand.

Full Report

Executive Summary

Can you always spot disruptive innovation? When we hear the story of how the invention of the automobile hastened the demise of buggy whip companies, we often question why the disruptive potential of gas-powered cars wasn’t noticed. In the modern era, most people buying digital cameras in the 1990s would have scoffed at the idea that in a few years’ time, we would all be carrying around cameras in our mobile phones. The potential for tokenization via blockchain has been talked about as being transformative for the past few years but we are not quite at the point of mass adoption. Unlike automobiles or more recent innovations like ChatGPT or the Metaverse, blockchain is a back-end infrastructure technology without a prominent consumer interface, making it harder to visibly see how it could be innovative. But we believe we are approaching an inflection point, where the promised potential of blockchain will be realized and be measured in billions of users and trillions of dollars in value. Successful adoption will be when blockchain has a billion-plus users who do not even realize they are using the technology. This is likely to be driven by the adoption of central bank digital currencies (CBDCs) by large central banks as well as tokenized assets in gaming and blockchain-based payments on social media. By 2030, up to $5 trillion of CBDCs could be circulating in major economies in the world, half or which could be linked to distributed ledger technology. Tokenization of financial and real-work assets could be the killer use case driving blockchain breakthrough with tokenization expected to grow by a factor of 80x in private markets and reach up to almost $4 trillion in value by 2030. We first wrote about tokenization in the 2021 Citi GPS report Future of Money: CBDCs, Crypto, and 21st Century Cash. At the time, China was starting to pilot test its (CBDC) and other central banks were warming up to the idea of their own digital currencies. In recent months, central banks in multiple large countries have announced plans for CBDCs this decade, giving almost 2 billion people the opportunity to experiment with digital currency. To be successfully adopted into the mainstream, blockchain needs the help of technology enablers, including (1) decentralized digital identities, (2) zero-knowledge proofs, (3) Oracles, and (4) secure bridges. The legal plumbing also needs to be altered to enable smart legal contracts that will provide a whole new set of rails for global commerce and finance to run on. Regulatory considerations are also necessary to allow adoption and scalability without the hindering innovation. Although we think mass adoption could still be six to eight years away, momentum on adoption has positively shifted as governments, large institutions, and corporations have moved from investigating the benefits of tokenization to trials and proofs of concept.

<p><span style="font-size: 24px;">Can you always spot disruptive innovation? When we hear the story of how the invention of the automobile hastened the demise of buggy whip companies, we often question why the disruptive potential of gas-powered cars wasn&rsquo;t noticed. In the modern era, most people buying digital cameras in the 1990s would have scoffed at the idea that in a few years&rsquo; time, we would all be carrying around cameras in our mobile phones.</span></p>
<p>The potential for tokenization via blockchain has been talked about as being transformative for the past few years but we are not quite at the point of mass adoption. Unlike automobiles or more recent innovations like ChatGPT or the Metaverse, blockchain is a back-end infrastructure technology without a prominent consumer interface, making it harder to visibly see how it could be innovative.</p>
<p>But we believe we are approaching an inflection point, where the promised potential of blockchain will be realized and be measured in billions of users and trillions of dollars in value. Successful adoption will be when blockchain has a billion-plus users who do not even realize they are using the technology. This is likely to be driven by the adoption of central bank digital currencies (CBDCs) by large central banks as well as tokenized assets in gaming and blockchain-based payments on social media. By 2030, up to $5 trillion of CBDCs could be circulating in major economies in the world, half or which could be linked to distributed ledger technology. Tokenization of financial and real-work assets could be the killer use case driving blockchain breakthrough with tokenization expected to grow by a factor of 80x in private markets and reach up to almost $4 trillion in value by 2030.</p>
<p>We first wrote about tokenization in the 2021 Citi GPS report <a href="https://www.citigroup.com/global/insights/citigps/future-of-money" target="_blank" rel="noopener" data-link-source="tiny"><em>Future of Money: CBDCs, Crypto, and 21st Century Cash</em></a><em>. </em>At the time, China was starting to pilot test its (CBDC) and other central banks were warming up to the idea of their own digital currencies. In recent months, central banks in multiple large countries have announced plans for CBDCs this decade, giving almost 2 billion people the opportunity to experiment with digital currency.</p>
<p>To be successfully adopted into the mainstream, blockchain needs the help of technology enablers, including (1) decentralized digital identities, (2) zero-knowledge proofs, (3) Oracles, and (4) secure bridges. The legal plumbing also needs to be altered to enable smart legal contracts that will provide a whole new set of rails for global commerce and finance to run on. Regulatory considerations are also necessary to allow adoption and scalability without the hindering innovation.</p>
<p>Although we think mass adoption could still be six to eight years away, momentum on adoption has positively shifted as governments, large institutions, and corporations have moved from investigating the benefits of tokenization to trials and proofs of concept.</p>

Billions of Users <div>Blockchain user numbers will be boosted by daily activity. The success of blockchain adoption will be measured by when it is being used by a billion plus end users who do not even realize they are using the technology. Blockchain-based products can make a significant&nbsp;impact in terms of wide consumer adoption in digital currency, especially central bank digital currency (CBDCs), gaming, and social.</div>
<div>&nbsp;</div> 

<div>Blockchain user numbers will be boosted by daily activity. The success of blockchain adoption will be measured by when it is being used by a billion plus end users who do not even realize they are using the technology. Blockchain-based products can make a significant&nbsp;impact in terms of wide consumer adoption in digital currency, especially central bank digital currency (CBDCs), gaming, and social.</div>
<div>&nbsp;</div>

Billions of Users

Trillions in Value <div>Almost anything of value can be tokenized and tokenization of financial and real-world assets could be the &ldquo;killer use-case&rdquo;&nbsp;blockchain needs to drive a breakthrough. We forecast $4 trillion to $5 trillion of tokenized digital securities and $1 trillion of&nbsp;distributed ledger technology (DLT)-based trade finance volumes by 2030.</div> 

<div>Almost anything of value can be tokenized and tokenization of financial and real-world assets could be the &ldquo;killer use-case&rdquo;&nbsp;blockchain needs to drive a breakthrough. We forecast $4 trillion to $5 trillion of tokenized digital securities and $1 trillion of&nbsp;distributed ledger technology (DLT)-based trade finance volumes by 2030.</div>

Trillions in Value

Technology Enablers <div>Blockchain promises something that is in parts a replacement of a current functioning system and in parts new capabilities&nbsp;and operating models. From a technology specification perspective, blockchain needs to have transaction scale and throughput,&nbsp;strong guarantees of security, on-chain identity, privacy, Oracles, bridges, and good user experience.</div> 

<div>Blockchain promises something that is in parts a replacement of a current functioning system and in parts new capabilities&nbsp;and operating models. From a technology specification perspective, blockchain needs to have transaction scale and throughput,&nbsp;strong guarantees of security, on-chain identity, privacy, Oracles, bridges, and good user experience.</div>

Technology Enablers

Legal Enablers <div>Contract creation and execution can be a painful process, making it ripe for disruption. Technology-enabled smart&nbsp;legal contracts, are legally binding agreements with obligations performed automatically by a computer. They are&nbsp;dynamic, connect to outside data sources, and allow for human involvement where necessary.</div> 

<div>Contract creation and execution can be a painful process, making it ripe for disruption. Technology-enabled smart&nbsp;legal contracts, are legally binding agreements with obligations performed automatically by a computer. They are&nbsp;dynamic, connect to outside data sources, and allow for human involvement where necessary.</div>

Legal Enablers

Can you always spot disruptive innovation? When we hear the story of how the invention of the automobile hastened the demise of buggy whip companies, we often question why the disruptive potential of gas-powered cars wasn’t noticed. In the modern era, most people buying digital cameras in the 1990s would have scoffed at the idea that in a few years’ time, we would all be carrying around cameras in our mobile phones. The potential for tokenization via blockchain has been talked about as being transformative for the past few years but we are not quite at the point of mass adoption. Unlike automobiles or more recent innovations like ChatGPT or the Metaverse, blockchain is a back-end infrastructure technology without a prominent consumer interface, making it harder to visibly see how it could be innovative. But we believe we are approaching an inflection point, where the promised potential of blockchain will be realized and be measured in billions of users and trillions of dollars in value. Successful adoption will be when blockchain has a billion-plus users who do not even realize they are using the technology. This is likely to be driven by the adoption of central bank digital currencies (CBDCs) by large central banks as well as tokenized assets in gaming and blockchain-based payments on social media. By 2030, up to $5 trillion of CBDCs could be circulating in major economies in the world, half or which could be linked to distributed ledger technology. Tokenization of financial and real-work assets could be the killer use case driving blockchain breakthrough with tokenization expected to grow by a factor of 80x in private markets and reach up to almost $4 trillion in value by 2030. We first wrote about tokenization in the 2021 Citi GPS report Future of Money: CBDCs, Crypto, and 21st Century Cash. At the time, China was starting to pilot test its (CBDC) and other central banks were warming up to the idea of their own digital currencies. In recent months, central banks in multiple large countries have announced plans for CBDCs this decade, giving almost 2 billion people the opportunity to experiment with digital currency. To be successfully adopted into the mainstream, blockchain needs the help of technology enablers, including (1) decentralized digital identities, (2) zero-knowledge proofs, (3) Oracles, and (4) secure bridges. The legal plumbing also needs to be altered to enable smart legal contracts that will provide a whole new set of rails for global commerce and finance to run on. Regulatory considerations are also necessary to allow adoption and scalability without the hindering innovation. Although we think mass adoption could still be six to eight years away, momentum on adoption has positively shifted as governments, large institutions, and corporations have moved from investigating the benefits of tokenization to trials and proofs of concept. Billions of Users <div>Blockchain user numbers will be boosted by daily activity. The success of blockchain adoption will be measured by when it is being used by a billion plus end users who do not even realize they are using the technology. Blockchain-based products can make a significant&nbsp;impact in terms of wide consumer adoption in digital currency, especially central bank digital currency (CBDCs), gaming, and social.</div>
<div>&nbsp;</div>  Trillions in Value <div>Almost anything of value can be tokenized and tokenization of financial and real-world assets could be the &ldquo;killer use-case&rdquo;&nbsp;blockchain needs to drive a breakthrough. We forecast $4 trillion to $5 trillion of tokenized digital securities and $1 trillion of&nbsp;distributed ledger technology (DLT)-based trade finance volumes by 2030.</div>  Technology Enablers <div>Blockchain promises something that is in parts a replacement of a current functioning system and in parts new capabilities&nbsp;and operating models. From a technology specification perspective, blockchain needs to have transaction scale and throughput,&nbsp;strong guarantees of security, on-chain identity, privacy, Oracles, bridges, and good user experience.</div>  Legal Enablers <div>Contract creation and execution can be a painful process, making it ripe for disruption. Technology-enabled smart&nbsp;legal contracts, are legally binding agreements with obligations performed automatically by a computer. They are&nbsp;dynamic, connect to outside data sources, and allow for human involvement where necessary.</div>   

Blockchain's Next Billion Users and Trillions in Value

Can you always spot disruptive innovation? When we hear the story of how the invention of the automobile hastened the demise of buggy whip companies, we often question why the disruptive potential of gas-powered cars wasn’t noticed.

Money, Tokens, and Games

Increased cyber risks, costs and complexities are causing a rising demand for Cyber talent, but the analysis in a new Citi GPS report highlights a growing shortage of cyber professionals. This has implications for countries, companies, boards and investors. Authors Pantelis Koutroumpis, from the Oxford Martin School, Fatima Boolani and Anita McBain from Citi, discuss some of the highlights and consequences of these trends.  

The Cyber Problem – Causes and Consequences of the Rise in Cyber Skill Demand

The Cyber Problem

Money, Tokens, and Games

The Creator Economy

Sign up to receive the latest from Citi.

The Cyber Problem – Causes and Consequences of the Rise in Cyber Skill Demand

UP NEXT

The Cyber Problem

Money, Tokens, and Games

The Creator Economy

Sign up to receive the latest from Citi.