Insights
Real-world assets (RWA) are physical assets such as real estate, commodities, and traditional securities that can be represented on a blockchain as digital assets. They’re often referred to as “tokenized assets” because they’re represented as digital tokens on a blockchain. The process of tokenizing an asset involves creating a digital representation of the asset and issuing it on a blockchain, so people can trade it and transfer it in a digital format.
One of the key benefits of tokenizing real-world assets is that it allows for increased liquidity. Traditional assets such as real estate or fine art can be difficult to trade because they’re illiquid – they can’t easily be bought or sold. But when tokenized, they can be traded on a digital marketplace, which can make it easier for buyers and sellers to find each other and complete transactions.
Another benefit of tokenizing real-world assets is that it can make it easier for smaller investors to participate in these markets. Traditional assets such as real estate or fine art can be expensive to buy in their entirety, but tokenizing them allows for fractional ownership. This means that investors can buy a small fraction of the asset instead of the whole thing.
Tokenizing real-world assets can also result in increased transparency. When an asset is tokenized, all of the information about the asset is stored on the blockchain, which is a public ledger. This means that anyone can view information about the asset, including its ownership history and any other relevant details. This can increase transparency and trust in the market.
It’s not clear if RWAs are the future of web3, as it’s a rapidly evolving field, and it’s hard to predict future trends. But the use of blockchain technology to represent and trade real-world assets is an area of active research and development. The potential for increased liquidity, transparency, and accessibility of these assets makes them an interesting area of exploration for the crypto space.
2022 was an important year for the growth of the RWA space (the first half of 2023 even more so!) and is expected to have a significant, long-term impact on the traditional financial system – as envisioned by e.g. Blackrock’s CEO.
