Tokenizing real-world assets could revolutionize various industries, including securities, real estate, art, and carbon credits, marking a new era in blockchain technology applications. This article delves into the tokenization ecosystem, examining its processes, use cases, and the legal and regulatory factors involved.
Asset tokenization is rapidly transforming the financial services sector. In 2018, the global market capitalization of tokenized assets was just $1.5 billion. Now, this figure has surged to $120 billion, with projections estimating a market cap of $16 trillion by 2030.
Tokenization involves converting rights to a real-world asset into a digital token on a blockchain, enabling these assets to be owned and traded online. This process applies to both tangible assets, like commodities, and intangible ones, such as patents. Tokenization holds the potential to revolutionize various sectors, including securities, real estate, art, and carbon credits.
By facilitating fractional investment, real-time price tracking, and improved supply chain management, tokenization is set to change traditional investment and trading practices. However, it also introduces unique legal and operational challenges that must be addressed to promote mass adoption and ensure successful implementation.