Imagine a world — a world where the economy moves unpredictably, a world where your hard-earned savings lose value day by day as inflation spirals out of control. On the streets of Buenos Aires, Juan is a fruit and vegetable vendor. Several times a month, he has to update his prices due to double-digit inflation. With the Argentine peso steadily falling, he watches his savings evaporate with concern. Imagine for Juan the possibility of investing in a stable asset not indexed to his currency, far from the turbulence of his local economy.
Now imagine yourself in an African village. For Amina, a young local entrepreneur, opening a bank account is a distant dream. To save, her only solution is to put a few bills under the mattress in the hope of not having them stolen. Unfortunately, without financial inclusion, she has no choice. Imagine if, from her smartphone, she could invest and receive her income every week. For Amina, it’s a real paradigm shift and peace of mind in her daily life.
Imagine in areas of the world where property rights are hampered by corrupt land tenure systems and jurisdictions where governments have implemented strict capital controls on foreign currency.
Finally, imagine yourself in Detroit, a once prosperous city hit by bankruptcy in 2013. Back then, very few entrepreneurs and investors would have bet on a revival of this iconic American city. That bet was even crazier with the rising interest rates we’ve seen in recent years!
Now, imagine two veteran real estate brothers with over forty years of combined expertise. They see the potential in revitalizing this city before anyone else. Imagine these two brothers sharing their vision and creating an innovative financial vehicle that would enable any investor from anywhere in the world to invest alongside them. On one hand, with their expertise, they source highly attractive investment opportunities for investors. On the other hand, with these acquisitions, they improve neighborhood management and tenants’ living conditions, creating a virtuous circle for all stakeholders.
Depending on where you’re reading this, and how sensitive you are, this little introduction may seem more or less realistic in today’s world around us.
On the other hand, according to Findex data, in 2021, over 1.4 billion people were still unbanked, making access to financial services very difficult. It is also certain that we live in a world where economic, technological and societal turbulence is not about to stop. To survive and thrive, an economic agent must remain agile and mobile, constantly reinventing itself. In a world where the real estate industry is evolving slowly, RealT wanted to start by focusing on the Real Estate tokenization market.
Since 2019, RealT has positioned itself as a pioneer and leader in this market segment. To innovate, RealT has developed an entire ecosystem and infrastructure called “RealToken”. Having developed a solid foundation, the “RealToken” protocol has now reached maturity, enabling tokenization of all types of real-world assets. According to some experts, asset tokenization could be the biggest growth driver for the financial sector. This new market would be as juicy as the latest technological revolutions we’ve seen in recent years.
For the past 18 months, hardly a week has gone by without some consulting firm, institutional fund or media outlet publishing a report on the potential and benefits of tokenizing Real-World assets, or “RWA”.
BlackRock CEO Larry Fink is a fervent supporter. According to him, “Tokenization is the Future of the Next Generation for Markets”. Before delving into tokenization, it would be interesting to analyze whether this innovation presents characteristics comparable to the Internet revolution or the emergence of Bitcoin.
Internet: At the dawn of a new world — Where were you?
In the late 1990s and early 2000s, the world witnessed a paradigm shift with the bursting of the Internet bubble. Startups were adding “.com” to their names, and their enterprise value was skyrocketing. They often had no viable business model or even the beginnings of an MVP (Minimum Viable Product). It was a time of euphoria on the markets when speculation was at its peak. The mere echo of the word “Internet” was enough to attract investors. Eventually, this bubble burst, bankrupting many companies that were, in reality, mostly empty shells. In the midst of this bloodbath, giants such as Google, Amazon, and Facebook emerged, defining the global technological and economic landscape we know today.
For their part, institutional funds like BlackRock didn’t immediately invest in these companies. They waited for the market to stabilize and for these giants to solidify their foundations. These funds initiated large-scale investments in the early stages of the company’s development. The company’s success has been measured in later years, for example, at the time of the initial public offering (IPO). Despite very attractive returns on investment, the real winners of this era were the early adopters, the visionaries, and the insiders. These individuals had understood the potential of this revolution before anyone else. They had succeeded in identifying the winning companies of this new growth cycle.
Bitcoin: the little-known revolution — Is this your biggest regret?
In the midst of the subprime crisis, Bitcoin emerged as a beacon of hope, paving the way for a whole new approach to electronic money. Just as in the era of Internet startups, this period of adoption saw the emergence of a multitude of competing projects claiming to be “the new Bitcoin”. They succeeded in attracting massive investment by proclaiming to be “like Bitcoin, but better,” “cheaper than Bitcoin,” “faster than Bitcoin,” “less energy-consuming than Bitcoin,” and so on.
Similar to the dot-com bubble, this wave of “copy-paste” projects turned out to be a failure. Despite raising millions, if not billions, in capital, the majority of these projects eventually disappeared, unable to deliver on their promises or develop a different value proposition. As with the Internet era, it was the visionaries, the early adopters and the insiders who were able to completely change their lives with Bitcoin.
Once again, history seems to be repeating itself, with institutional funds and soon pension funds beginning to invest heavily in this asset after the Bitcoin ETF was approved in 2024. For BlackRock CEO Larry Fink, “These [crypto ETFs] are just stepping stones towards tokenization. I really do believe this where we’re going. We have the technology to tokenize today. Think about this: if you have a tokenized security and a tokenized identity, the moment you buy and sell an instrument, it is known. It is on a general ledger. You want to talk about all the issues around money laundering? This eliminates all corruption, by having a tokenized system.”
With the approval of ETFs, all individuals investing in Bitcoin for the first time can no longer proclaim themselves as “early adopters”. This scenario repeats itself endlessly and tirelessly. For example, you could cite the time when projects raised millions on the narrative that they were “Ethereum, but better”, “cheaper than Ethereum”, or “faster than Ethereum”. Yet, despite raising millions, the majority of these projects continue to lose market share after market share.
This madness continued during the ICO bubble in 2017 and the latest round in 2021. As in the 2000s, all it took was the word “DeFi,” “Web3,” “Metaverse,” or “NFT” for a project to raise tens of millions. As Albert Einstein said, “Insanity is doing the same thing over and over again and expecting a different result”. Yet, once again, history has repeated itself with the collapse of the majority of projects. As in the GAFAM era, some projects managed to pull through and represent today’s DeFi pillars, such as Aave, Maker Dao and Uniswap.
RWA: The next big innovation — it’s your time
Would you believe me if I told you that history seems once again to be repeating itself before your very eyes? All the experts seem to agree that tokenization is the next revolution in our financial system. Numerous projects have raised substantial sums of money simply by putting the word “Tokenization” in their presentation and sprinkling the whole thing with a roadmap featuring all the buzzwords in fashion. RealT, on the other hand, has been present and leading the market for over 5 years. Not a quarter goes by without the appearance of a new project claiming to be “like RealT but on a different blockchain”, “it’s like RealT but in this specific country,” “it’s like RealT, but we offer green investments,” and so on.
In 2019, when the Jacobson brothers founded RealT, you had to be an “OG,” i.e., have been around the cryptocurrency scene since the beginning, to be familiar with and interested in tokenization. Indeed, alongside their experience in Real Estate, the two brothers were also Bitcoin forerunners, being the first industrial miners in the United States as early as 2013, just 4 years after Satoshi Nakamoto’s creation. During these years of mining, they tried to evangelize those who would listen to them by creating the first Bitcoin embassy in Montreal. Member by member, they tried to explain the benefits of tokenization and convince these early adopters.
In 2019, the Jacobson brothers had it right: to democratize the tokenization of Real-World assets, what better than the Real Estate market?
Tokenization revolutionizes the investor experience, offering:
- Invest as little as $50
- Receive income every week
- Compose your own income
- Buy or sell your investment 24/7
- Use the power of collateralization
- Integrate with other market-leading DeFi projects
The Bain report confirms that Real Estate could be one of the most suitable markets for tokenization. According to their study, “the Real Estate market is inherently illiquid, and tokenization represents the most effective tool for unlocking this untapped capital”.
Recently, institutional funds, led by BlackRock, have also been preaching the benefits of tokenization. If history repeats itself, these giants should soon be jumping into the fray and starting to take market share in this gigantic market. According to the BCG report, in a conservative simulation, asset tokenization would reach 16,100 billion by 2030. In the best of all possible worlds, if all the planets were aligned, this market could grow to $68,000 billion.
At the beginning of 2024, according to DeFiLlama, the RWA tokenization market is still only worth $5 billion.
Of these 5 billion, 99% of tokenized assets are US Treasury bonds. This type of asset has been very attractive in recent months, as bond yields have risen sharply, providing DeFi with a new source of return. On this type of asset, margins for issuers are much lower than on Real Estate. Once rates start to fall and their products lose their appeal, it will be interesting to see how these players react. On the other hand, what is certain is that, by doing a simple cross-product, asset tokenization today represents between 0.007%, and 0.03% of the market by 2030. Put another way, in less than 6 years, this market will grow at a staggering rate, estimated at between +321,900% and 1,359,900%. So yes, if you’re reading these lines, you understand that for the first time in your life, you’re an “early adopter,” a visionary, an “insider”. But beware: as with Bitcoin, once the funds make tokenization accessible, you can no longer be considered an “early adopter”.
As you can see, as with the Internet, this gigantic market will be captured by a handful of players. The next few years will decide who the next GAFAMs in this market will be.
On one hand, we have traditional financial institutions that have the financial and human resources, but have lost their agility because of their structure and the fear of losing certain licenses due to the weight of regulations.
On the other hand, for entrepreneurs, the new regulations require substantial financial capital. This need will be a very difficult barrier for a new startup to overcome.
Then there’s you: for the first time in history, Web3 offers you a say and a slice of the pie. At your level, this is the first time you can tip the balance one way or the other. Today, thanks to “DeFi,” or decentralized finance, anyone with an interest and a passion can take part in this revolution and benefit from the billions in value that this infrastructure will generate over the coming decades.
Today, of course, our perception is slightly biased, but we sincerely believe that RealT with its “RealToken” protocol, can become the big winner of this financial revolution. Let us show you what we’ve already achieved over the past 5 years together.
Take a look at the properties available on RealT: https://realt.co/ and follow our social media below.
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