Tokenization: Real World Assets on the Blockchain
Skip to content
AZC.News
en EN
BTC Coin BTC
3.25%
ETH Coin ETH
1.99%
USDT Coin USDT
0.01%
BNB Coin BNB
2.67%
SOL Coin SOL
2.22%
XRP Coin XRP
2.85%
USDC Coin USDC
0.02%
DOGE Coin DOGE
13.96%
ADA Coin ADA
3.34%
AVAX Coin AVAX
3.14%
BTC Coin BTC
3.25%
ETH Coin ETH
1.99%
USDT Coin USDT
0.01%
BNB Coin BNB
2.67%
SOL Coin SOL
2.22%
XRP Coin XRP
2.85%
USDC Coin USDC
0.02%
DOGE Coin DOGE
13.96%
ADA Coin ADA
3.34%
AVAX Coin AVAX
3.14%
Search...
Home > News > Editor Choice
Published: 23/03/2024
-
Author: Az-Coiner
Tokenization: Real World Assets on the Blockchain
Tokenizing Real-World Assets (RWA) is a crucial domain where blockchain technology can play a significant role in addressing real-world challenges.
Tokenization: Real World Assets On The Blockchain_65d5cbe8acba3.jpeg
Table of Contents
Real World Assets on the Blockchain
The process of tokenizing real-world assets (RWA) is a significant area where blockchain can contribute to addressing real-world issues. While RWAs are often considered as purely investment assets, they are closely tied to concerns such as social progress, housing, the environment, and more.
By tokenizing off-chain assets like currencies, commodities, stocks, carbon offsets, real estate, bonds, and artworks, a more transparent global trading market can be established to help tackle these challenges.
The purpose of cryptocurrency assets is to build a valuable, cryptography-encoded storage or reward system in the digital realm. Cryptocurrency assets are easy to develop and monitor on the blockchain, and they can be divided according to usage or purpose.
Real World Assets
However, their drawback lies in their intrinsic value, resulting in considerable price volatility. On the other hand, RWAs are related to and serve a purpose in the physical world, which gives them the advantage of having intrinsic value and relatively stable prices when tied to real-world value.
Tokenized RWAs can contribute to increasing the Total Value Locked (TVL) and on-chain transactions as on-chain assets. Furthermore, they can foster ecosystem expansion by developing communities, increasing on-chain liquidity, and expanding businesses.
This is a significant concern for the entire blockchain industry.
1697095264
How Does Tokenization Enhance Asset Availability for Buyers?
It offers a digital representation of tangible assets using digital tokens. In today’s world, buying a plane ticket or a new sweater only takes a click, but purchasing stocks or mortgages requires much more time.
Many transactions don’t occur instantly, as they require document processing or settlement. Assets like gold, real estate, artwork, and carbon credits are some of the hardest to transfer, demanding both buyers and sellers to endure mountains of paperwork and lengthy procedures.
Real World Assets
Using Blockchain to Expedite Value Transfer
Cross-border payment procedures today are inefficient, complex, and slow. Payments serve as the foundation for global trade, but real-time payments are yet to be achieved.
Be it asset trading or other types of assets, the ability to transfer tangible assets within a blockchain introduces benefits for digitally secured platforms while still maintaining asset characteristics.
Tokenization is the process of synthesizing enforceable agreements, such as collateral, car loans, consumer debt, payables, and revenue generated, and selling them to investors in standardized units.
1697095405
Since the early 1970s, this practice has become more popular and widespread. However, “tokenization” takes it a step further by encoding real-world assets. Instead of restructuring cash flow as securitization does, real-world asset tokenization focuses on the “token.”
An Economy Centered Around Tokenized Assets
Asset-backed tokens are becoming significantly popular. Initial Coin Offerings (ICOs) are an example. This novel crowd-funding method has recently raised over $4 billion worldwide.
To fund projects, ICOs require creating and selling cryptocurrencies or tokens. With ICOs, an idea has a feasible alternative to conventional funding methods, such as banks or venture capitalists, which usually demand a substantial amount of time and a transfer of control.
1697095451
Why Tokenize Real-World Assets?
Our world is filled with assets, including stocks, real estate, precious metals, carbon credits, and hydrocarbons. Many of these items are challenging to transfer or divide physically, so buyers and sellers exchange documents representing a portion or the entirety of the object.
Nevertheless, paperwork and complex legal procedures are posing challenges in transferring and monitoring assets. A feasible approach is to apply a digital system similar to Bitcoin to real-world assets.
Electronic transactions and standardized agreements have largely replaced physical documents in commodity exchange, but the administrative costs of these systems are extensive, and they often rely on the involvement of trusted intermediaries.
1697095525
Startups and prominent financial institutions worldwide are urgently developing systems for this next phase of development, which involves asset tokenization.
Specific Rights Transfers vs. Ownership Transfers
There are many forms of asset transfers and ownership rights. Sometimes, only limited rights related to a new asset are transferred, such as a time-bound land use agreement rather than ownership of the property.
Over thousands of years, real estate ownership has led to various forms of ownership structures and control mechanisms, such as “trust” (property ownership on behalf of another).
Specific details depend on the applicable jurisdiction, the form of law (common law versus civil law), the asset, and the rights that need to be transferred.
1697095593
Some intangible assets, such as music copyrights, can be licensed simultaneously to millions of individuals.
When customers “buy” a recording from iTunes, they don’t acquire ownership (alteration of ownership); instead, they are purchasing a right, a license, to listen to the music under certain circumstances.
In general, blockchain projects can be categorized into partially rights-based projects, such as music licenses, and entirely ownership-based projects, such as selling real estate.
Tokenizing Real-World Assets Requires Creating a Virtual Investment Vehicle
That is based on blockchain and supported by tangible assets like real estate, precious metals, artworks, and antiquities. Instead of a tangible title, ownership rights are recorded on the blockchain. This can be traded directly between two parties or split and sold to a large number of individuals.
1697095669
There are numerous advantages to maintaining ownership rights of tangible objects on the blockchain:
It reduces costs by eliminating intermediaries like lawyers, brokers, banks, etc.
It allows product transactions to be quick and efficient, previously only doable within “business hours.”
It lowers entry barriers and increases liquidity.
Its straightforward process increases the confidence and responsibility of traders.
>>> The Significant Developments of Real World Assets
The Future of Tokenized RWAs
Traditional financial institutions are keen on tokenizing assets such as gold, stocks, and commodities that they have been trading. Franklin Templeton, an investment fund, launched the Franklin OnChain U.S. Government Money Fund on Stellar in 2021 and expanded to Polygon in 2023.
This investment fund is the first registered mutual fund in the United States to process and record stock ownership by using a public blockchain.
Banks in the United States have recently called tokenized RWAs the “main driver for the adoption of digital assets.” According to their report, over $1 billion has been invested in the tokenized gold market.
Demand for tokenized U.S. Treasury bonds is also on the rise, with an accumulated market cap of nearly $500 million for cryptocurrency market funds.
A leading international business consulting firm predicts that global demand for tokenized real-world assets will increase to $16 trillion by 2030, indicating a promising future for tokenization.
Read Less
#Real World Assets
#RWA
5.0/5
(101 votes)
Leave a Reply
Your email address will not be published. Required fields are marked *
Comment *
Twitter
Telegram
Name
Save my name, email, and website in this browser for the next time I comment.
LATEST
Azcnews Breaking
Airdrops | Altcoin | Editor Choice | News 23/03/2024
How to Participate in the Backpack Airdrop
Backpack is an advanced trading platform and wallet for xNFTs on Solana, currently hosting an airdrop program for users with rewards of up to thousands of USD. Detailed instructions can be found here!
Azcnews Breaking
Airdrops | Altcoin | Editor Choice | News 22/03/2024
Guide to Participating in Eclipse Testnet
Eclipse has recently launched its Testnet program and promises to mainnet and release tokens in the second quarter of this year. Join the Testnet experience for a chance to receive future airdrops.
Azcnews Xrp
News | Editor Choice | NFT 22/03/2024
CryptoPunks NFT Fetches $16 Million in Ethereum Sale
Recently, a CryptoPunks NFT entered the annals of history with a staggering $16 million sale, underscoring its profound impact on the NFT landscape.
Azcnews (3)
News | Altcoin | Editor Choice 22/03/2024
XRPL to Launch AMM Feature, Is XRP Set for a Significant Surge?
XRPL introduces AMM feature, enhancing liquidity and passive income opportunities. Ripple foresees increased XRP adoption and elevated ecosystem functionality.
Azcnews Breaking1
News | Altcoin | Editor Choice 22/03/2024
NIM Network Announces Airdrop of 90 Million Tokens
NIM Network - an AI Gaming project developed on DYM, will allocate 9% of the total supply for an airdrop to approximately 500,000 eligible wallets.
Top views
1
Binance Announces Removal Of BNB & TUSD Spot Trading Pairs
2
Ether.fi (ETHFI) Announces Token Airdrop
3
Short-Term Bitcoin Investors Have Reaped Profits
4
Playing the Game to Receive Telegram’s Notcoin Airdrop
5
Complete KYC & Receive up to 1,000 USDT on BingX
6
What is etherFi? An Overview of the etherFi Project
7
Binance Announces Listing of Book of Meme (BOME)
8
Bitcoin ETF Registers Weekly Inflow of $2.5 Billion
9
Receive Airdrop on Binance Web3 Wallet
10
Elon Musk Continues to Promote Dogecoin
About AZC.News
About Us
Contact Us
Privacy Policy
Terms of Services
Market
Analytics
Top Crypto Exchange
Top Cryptocurrency
Knowledge
Research
Glossary
Earn
Airdrop
Social Community
Copyright 2024 © AZ Coiner
