Introducing the powerful world of RWAs (Real-World Assets) tokenization, a unique concept designed to change the way investors and wealth managers see asset management.
The tokenization process begins when a financial institution or, in this case, a decentralized financial platform issues tokens that represent real-world assets.
Tokens reflect the ownership of a real-world asset, such as real estate assets, and U.S. stocks are more prone to market volatility and economic swings. The way in which your investments perform might be impacted by market conditions.
Some benefits of tokenization include full asset ownership, quick, low-cost transactions, and borderless payments. According to the 2021 Findex Data, as many as 1.4 billion people do not have access to financial services. This means, as all these people don’t have bank accounts or credit cards, it’s nearly impossible for them to invest in traditional ways.
Exploring Market Volatility: Why it Matters
Market volatility is a constant factor in traditional financial markets. Tokenized real-world assets (RWA) offer an advantage in this scenario.
Not only is this an affordable approach to real estate investing, but it also opens the door to diversified portfolios. It makes a class of resources that are typically unreachable, accessible, or liquid. With RealT, you have access to full fractionalized ownership, without the need for intermediaries.
Tokenization is like a bridge between blockchain and traditional markets. And this bridge allows for a variety of real-world assets, like real estate, to be transformed into tokens that you can buy and sell on the blockchain.
But why does tokenizing these assets matter, especially when it comes to hedging against market volatility? Let’s break it down:
- Asset Tokenization and Greater Accessibility
As tokenized assets are divisible, this means that you can purchase a small fraction of a real estate property or a renowned piece of art, making these high-value assets more accessible to the average investor. Increased accessibility means a larger pool of investors, which results in more liquidity. More liquidity, in turn, reduces price volatility.
This inherent stability can be a buffer against the more volatile cryptocurrency market. For instance, if a cryptocurrency were to plummet, the tokenized real estate asset linked to it ideally would retain its value, thus minimizing your potential losses, same with an art masterpiece.
- Global Market Accessibility
Tokenization also democratizes global investment access. This means that any person based in France, for example, could easily invest in real estate located anywhere in the world, enabling greater geographical diversification. Having access to a wide market can help your portfolio do well, even when the market is unpredictable.
While it’s essential to recognize no investment is entirely risk-free, tokenization serves as a valuable tool, allowing for fractionalized ownership as another approach to portfolio diversification. Real estate, as one of the most stable markets, becomes more accessible and flexible through tokenization. This method not only facilitates the division of property into tradable tokens, but also empowers investors to allocate their resources across diverse properties.
The Bottom Line
Tokenized real-world assets can provide a strong hedge against market volatility. They offer the opportunity made by the blockchain and the reliability inherent in tangible assets. By marrying the best of both worlds, they present an appealing and promising avenue right now, especially amid present-day market uncertainties.
Start building your RWA portfolio with Tokenized Real Estate at RealT.
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The information in this communication is for informational purposes only and shall not constitute an offer to sell or the solicitation of an offer to sell or solicitation of an offer to buy securities. No offer of securities shall be made except by lawful means of an Offering Memorandum meeting the requirements of the relevant jurisdiction(s) and securities regulations. This communication shall also not constitute a solicitation of a proxy, consent or authorization with respect to any securities or in respect of the proposed business initiative.
