By 2030, the Asset Tokenization market will reach 16 trillion dollars and 10% of the Gross Domestic Product (GDP), according to a study by Boston Consulting Group.
That is way more than any other traditional market known. The market grows rapidly when the accessibility to assets is increased.
But before we explain the Liquidity aspect, let’s explain Tokenization. In short terms, it’s the digitization of the proof of ownership of an asset. So a token would be that proof of ownership. The remarkable thing about the token is that it can be saved, tracked, and transferred on the blockchain.
But, how does this change the liquidity of Real-World Assets?
Oh, in various ways. First, let’s describe Real-Word Assets (RWA). These include things like real estate, art, gold, equities, and collectibles. They can also be intangible items, like patents and bonds. When real-world assets are “Tokenized”, their ownership rights become Blockchain tokens.
Accessibility to Liquidity
So, have you ever felt that properties or artwork have a price that goes beyond your budget? For example, when you invest in Real Estate, you know this market is highly illiquid. When you rent or sell a property, it can take months or even years to get the money. You have to go through many steps before you can get liquidity.
Regulatory hurdles, the inability to fractionalize inherent utility, and geographical limitations play important roles in the illiquidity of real-world assets. Also, illiquid assets have a lower trade ratio compared to liquid assets. That’s why illiquid assets tend to trade at a discounted value.
With fractionalized ownership, the liquidity is instant. Imagine you own a fraction of a property without the hassle of paying a down payment. This makes it possible for you to receive a monthly rental income without having to work with real estate agents or intermediaries.
Real Estate is not the only RWA being liquidized; For example, liquor has a high level of investment. Malt whisky seen at UK auctions has returned over 21% annually over the past 10 years, and Japanese whisky has the biggest ROI compared to others. So next time you’re holding that bottle of single malt scotch, you might want to think about tokenizing it!
What kind of Real-World Assets have been tokenized so far?
- Real Estate, tokenized by RealT
Since its launch in 2019, RealT has tokenized over 350 properties valued over $85 million, ranging from single-family houses to substantial multifamily apartment complexes. RealT tokenization allows for fractionalized ownership of real estate properties and asset liquidity, with an average expected yield of 10% for investors.
- Gold, tokenized by Paxos Gold and Tether Gold
Unlike traditional stock gold, each gold token is backed by physical gold. So it is essentially like owning blocks of gold without needing to make space for it. All tokenized securely in the blockchain.
- Music, tokenized by ANote Music
Diversify your investments with music royalties. Profit from tokenized music dividends, unrelated to conventional financial stocks.
- Whisky, tokenized by Wave Digital Assets
The Wave Kentucky Whiskey 2020 Digital Fund, allows for investors to buy tokens along with the partnership “Wilderness Trail Distillery in Kentucky” since 2020. The Spirit’s liquidity and shares are expected to be accessible in 3 years from the distillation. According to reports, these barrels can go from $1,000 to $4,000 in revenue.
- Equity, tokenized by SpiceVc
SpiceVC is a Tokenized Venture Capital. Spice invests in portfolio firms using equities and tokenizing them. Token holders can receive the portfolio company’s exits when they take place.
The Revolution
Liquidity is not the only revolutionary aspect of RWA Tokenization. The data of these tokenized properties is fully visible to investors in the blockchain. They can see aspects like the appraisal of the value, the income, occupancy, expenses, the cap table, etc.
By tokenizing assets, investors can split the risks and co-own physical assets with people they’ve never met. This is the redefinition of value generation! The adoption of tokenization democratizes access to capital markets, creating new financial possibilities.
In conclusion, tokenization is the digital representation of value. It makes possible the reduction of bureaucratic costs and faster transfers of funds. The tokenization of real-world assets is here to stay, and it is a permanent revolution in financial markets.
Today, with RealT, you can create your own real estate portfolio at your own pace and discover this universe of decentralized finance.
Join us in breaking down barriers.
Join the global set of RealT users who are receiving rental payments from U.S. real estate properties every day.
Take a look at the properties available on RealT on our website: https://realt.co/ and our social media below.
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