The biggest challenge with real-world assets (RWAs) like real estate, private equity, and commodities is that, despite their trillions in value, much of this wealth remains locked in slow, inefficient, and illiquid markets
For example, selling real estate typically takes 30 to 90 days, increasing holding costs for sellers. Private equity is even less liquid, with investors waiting years for an exit through acquisitions or public listings. This lack of liquidity ties up capital and limits reinvestment opportunities.
Cryptocurrencies have demonstrated the power of blockchain-based assets, but beyond trading, blockchain is now addressing real-world financial inefficiencies through tokenization. By converting traditionally illiquid RWAs into smaller, tradable units, Tokenization unlocks liquidity and expands market access.
McKinsey projects that tokenized markets could reach $2 trillion by 2030. BlackRock CEO Larry Fink echoed this shift, stating in January 2024: “We believe the next step going forward will be the tokenization of financial assets … every stock, every bond … will be on one general ledger.”
Tokenization is the process of converting ownership of physical or financial assets into digital tokens on a blockchain. These tokens represent shares in real estate, stocks, bonds, commodities, or even art, allowing fractional ownership, instant transactions, and global access.
Instead of requiring millions to buy a commercial building, tokenization enables multiple investors to own small fractions of the asset, making high-value investments more accessible to a broader audience.
Traditionally, investing in assets like real estate or private equity requires significant capital. Tokenization enables fractional ownership, allowing investors to buy small portions of high-value assets instead of purchasing the entire asset. This opens up opportunities for:
Selling real-world assets can take months or even years. Tokenized assets can be traded instantly on secondary markets, reducing long wait times for exits and making it easier for investors to cash out when needed.
Traditional asset transactions involve brokers, banks, and legal firms, adding extra fees and delays. Ownership transfers can take days or even weeks due to paperwork and regulatory processes. Tokenization eliminates these inefficiencies by using blockchain-based smart contracts, which automate transactions, reduce costs, and enable instant asset transfers.
Tokenized assets can be traded 24/7 across international markets, removing geographical barriers that exist in traditional investment markets.