In less than two decades, exchange-traded funds (ETFs) have surged from $1 trillion in assets to more than $10 trillion today, with Bank of America predicting a market of $50 trillion by 2030.

Investors are attracted to ETFs for the diversification they offer, similar to mutual funds, but with the liquidity of stocks and typically lower fees.

However, this doesn’t fully account for their immense success. ETFs, at their core, are a financial technology that democratizes access to diverse asset classes and strategies, making them accessible to average investors where it was once difficult.

As financial innovations have shown in the past, ETFs have improved access, diminished barriers, and expanded choices—creating entirely new markets. Historical context reveals that technologies initially tend to have a small-scale beginning before they disrupt existing markets.

For instance, ETFs were once seen as niche products suited only for a select group of investors. Yet, they are now largely touching the mainstream investor market. This year, active ETFs made up 76% of all U.S.-listed ETF launches.

Clay Christensen’s Innovator’s Dilemma illustrates how traditional market players are hesitant to embrace new technologies, often overlooking the potential market that could emerge. The creation of the $10 trillion ETF market exemplifies this phenomenon.

Tokens, akin to ETFs, also have the capability to democratize finance significantly. However, misconceptions abound regarding tokens, with many assuming they are merely cryptocurrencies. It’s important to understand that many tokens actually serve as vehicles for value, much like shipping containers hold various goods.

These programmable tokens can embody diverse assets—from stocks and bonds to art and intellect. Their accessibility worldwide, thanks to the internet, reduces reliance on traditional intermediaries, and the technology embedded within, such as smart contracts, automates functions that would typically require brokers or exchanges.

The advent of stablecoins, which enable the secure movement and storage of value in the form of U.S. dollars, represents a significant advancement in this area. With over $150 billion in circulation, they revolutionize both investment and payments.

Ultimately, both ETFs and tokens have the potential to create new markets and customize financial products to better suit user needs. As the landscape evolves, incumbents must adapt or risk being left behind as new financial leaders emerge from this token revolution.