The world of crypto assets has seen significant growth in recent years, with the total market capitalization reaching over $3 billion in November 2021. A new sector within the cryptocurrency industry is poised to continue the trend and explode in growth terms.
According to the decentralized finance expert under the pseudonym “Edgy,” the real-world asset sector (RWA) is set to change the course of the nascent industry. Edgy believes that the real-world asset sector could reach a market cap of $16 trillion by 2030, which could catalyze cryptocurrencies into the mainstream.
The real-world asset sector uses blockchain technology to tokenize real-world assets, such as real estate, commodities, and other physical assets. Tokenization means converting ownership of an asset into digital tokens, which can be traded on a blockchain-based platform, making the asset more accessible to a wider range of investors.
To tokenize a real-world asset, a digital representation of the asset is created on a blockchain-based platform. This digital representation is divided into smaller units, or tokens, that investors can buy and sell. Once the asset has been tokenized, it can be traded on a cryptocurrency exchange like any other asset.Tokenization of global liquidity by 2030. Source: Edgy on Twitter.
With this said, Edgy suggests that certain factors can act as “catalysts” to propel the growth of the real-world asset sector toward the target of reaching $16 trillion by 2030. Here are a few of them:Amazon’s NFTs are rumored to be tied to real-world assets. The American multinational giant allegedly plans to launch its own NFT platform, which may be tied to real-world assets. Moreover, Goldman Sachs launched GS Dap to tokenize traditional assets. GS Dap is a blockchain-based platform launched by the leading financial institution that allows traditional assets, such as loans and bonds, to be tokenized and traded on a blockchain-based platform. Additionally, the technology company Siemens issued a $60 million bond tokenized on the Polygon Network. This bond was the first corporate bond to be issued using blockchain technology, demonstrating the potential of blockchain-based platforms for the crypto and real-world asset sectors.
The “catalysts” mentioned earlier may only be a small part of the real-world asset sector’s potential and its ability to grow and impact various aspects of the global economy. According to Jeremy Allaire, the CEO of Circle, tokenized property and contracts will likely become commonplace within the next 5-10 years.
Allaire’s comments followed the news that Homebase, a company specializing in tokenized real estate, had successfully sold out its first tokenized rental property on the Solana blockchain in under two weeks.Homebase announcement of the selling out of its 1st tokenized home on Solana. Source: Homebase on Twitter. What Are Some Further Benefits For The Crypto Industry Of RWA
In addition to the potential for growth within the cryptocurrency industry, Edgy emphasizes the real-world asset sector’s benefits, such as cost savings, increased accessibility for smaller investments, and improved access to financing through tokenized assets.
By tokenizing assets, the RWA sector allows for direct ownership and trading of assets, cutting out intermediaries such as brokers and other rent seekers. If an investor cannot buy an entire property, they can buy a small portion.
Additionally, tokenized assets can be used as collateral for loans, which can help businesses that may have difficulty accessing traditional forms of financing, which is beneficial for businesses in emerging markets, where access to capital may be limited.
Overall, the sector’s benefits include increased accessibility and liquidity of traditionally illiquid assets, lower transaction costs, and greater efficiency in buying and selling assets. As the sector continues to evolve, more benefits will likely emerge, further driving the growth and adoption of the crypto sector.total market cap on the 1-day chart. Source: TOTAL on TradingView.com
Featured image from Unsplash, chart from tradingView.com