Blockchain technology drives the wave of asset tokenization

As blockchain technology matures and is widely applied, the tokenization of real-world assets is accelerating, a phenomenon known as "the Great Tokenization." This transformation of asset ownership, trading, and value creation is reshaping the market landscape worth trillions of dollars. Imagine being able to own a small piece of airspace over Manhattan and trade it like stocks; or invest in a famous Picasso painting for just $50; or even easily purchase government bonds with just a tap on your smartphone, or buy time to have a 30-minute conversation with your favorite figure in the crypto space (this time can be traded and its value may fluctuate). These are no longer distant visions, but realities that are currently happening.

The emergence of asset tokenization has made many previously inaccessible markets approachable. Today, real estate ownership is fragmented, allowing investors to purchase shares of properties around the world for far less than the price of a lavish dinner. Government securities, traditionally only available to large institutional investors, are also gradually being introduced to blockchain, enabling ordinary investors to participate. Whether it is energy, time, airspace, intellectual property, mortgages, car rentals, or carbon credits, as long as it is an asset, whether tangible or intangible, tokenization exploration is underway.

The core of asset tokenization lies in transforming asset rights—whether physical assets or digital assets, tangible or intangible—into digital tokens on the blockchain. This seemingly simple process contains infinite possibilities, mainly reflected in the following four major advantages:

1. Enhance Liquidity

Through tokenization, assets can be bought and sold at any time, enhancing market liquidity.

2. Achieve Segregated Ownership

Investors can purchase partial rights to assets, greatly lowering the investment threshold for high-value assets.

3. Enhance Transparency

The openness and immutability of Blockchain technology make the asset trading process more transparent, reducing the risks of fraud and disputes.

4. Reduce transaction fees

Through technologies such as smart contracts, the intermediary costs in traditional transactions have been significantly reduced.

The impact of this transformation is profound. In the field of scientific research, the tokenization of intellectual property is changing the way biomedical research is financed, attracting the attention of more small investors. The tokenization process in the high-end liquor market is also allowing more people to access assets that were previously considered luxury goods. Even precious metals like gold are being redefined in the wave of digitalization, enabling investors to own and trade partial rights to gold without handling the physical asset.

From real estate to rare whisky, from carbon credits to future earnings, the potential of tokenization seems boundless. It not only changes the way we invest but also reshapes our understanding of ownership and value. Next, we will delve into the world of tokenization and its far-reaching impacts, analyzing various unique projects, studying the technologies driving this transformation, and looking ahead to trends in asset ownership and trading. Let us witness how the "great tokenization" is reshaping the global financial ecosystem on a new level.

1. "The Great Tokenization": The Rise of a Trillion-Dollar Opportunity

Globally, trillions of assets are waiting for the possibility of tokenization. According to data platforms, the assets that have been tokenized so far are approximately $185 billion (including stablecoins), a figure that has sparked widespread attention. This leads people to ponder: what does this great wave of tokenization truly mean? How can individuals seize this opportunity to realize profits?

1. Blockchain: The Cornerstone of Tokenization

The role of blockchain becomes particularly important when discussing asset tokenization. Although cryptocurrencies are sometimes seen as "solutions in search of problems," the advantages of blockchain become very apparent in the context of asset tokenization. The traditional asset management sector has long faced many issues that have troubled investors, issuers, and regulators. The lack of transparency in private markets has led to pricing discrepancies and increased risks; the poor liquidity of high-value assets (such as real estate and artworks) locks up large amounts of capital for extended periods; high entry barriers make it difficult for small investors to achieve asset diversification; inefficient processes with multiple intermediaries slow down transactions, increase costs, and are prone to errors. Furthermore, limited trading hours restrict investors' ability to respond quickly to global events, while market opacity provides opportunities for fraud and manipulation.

Blockchain technology provides solutions to these long-standing problems. It records all transactions through an immutable public ledger that is accessible to any participant. This unprecedented level of transparency and security not only enhances trust among investors but also significantly reduces the risk of fraud, improving the transparency issues in many asset markets.

2. Revolutionary Changes in Trading Methods

Another major breakthrough of blockchain technology is its enhanced tradability. This technology enables 24/7 uninterrupted trading, breaking the constraints of time zones and reducing reliance on intermediaries. This continuous market activity injects new vitality into assets that have traditionally lacked liquidity. Imagine being able to buy and sell a portion of real estate as easily as trading stocks; this is the appeal of tokenization.

These benefits are not limited to transparency and tradability. The programmability of Blockchain, especially through the application of smart contracts, opens up new possibilities for asset management and governance. Dividend distribution, voting rights, and other complex processes can be automated, improving efficiency and providing investors with new participation opportunities. This mechanism effectively addresses the complexities of corporate behavior management in traditional systems.

3. Break down barriers and expand investment opportunities

These features combine to democratize investment opportunities in an unprecedented way. High-value assets that were once only accessible to wealthy investors can now be divided into smaller, more obtainable units. This model of fractional ownership not only expands access to various assets such as artworks and commercial real estate but also enables more investors to build diversified portfolios, breaking down the long-standing high barriers that excluded small investors.

2. Advantages of Tokenization

The core of tokenization lies in creating a digital representation of assets through blockchain technology. This process encompasses a wide range from real estate, artworks to intangible assets (such as intellectual property). Each token symbolizes a partial ownership of the underlying asset, making the ownership structure of the asset more refined and flexible.

The Four Pillars of Tokenization

1. Fractional Ownership: One important advantage of tokenization is the ability to divide assets into smaller, more affordable units, making previously inaccessible investment opportunities more widespread. For example, investors no longer need millions of funds to invest in high-end real estate, but can instead purchase tokens that represent a small portion of the property.

2. Enhanced Transparency: Blockchain technology provides an immutable transaction record, which not only reduces the risk of fraud but also enhances market trust while simplifying the audit process.

3. Reduce transaction costs: By eliminating intermediaries and simplifying the transaction process, tokenization can significantly lower the costs associated with asset transfer and management.

4. Improve liquidity: Tokenization transforms traditionally illiquid assets into easily tradable digital tokens, potentially creating new, more liquid markets for various assets.

Tokenization of Tangible and Intangible Assets

One of the most striking aspects of tokenization is the tokenization of intangible assets. Such assets have often been difficult to convert into liquid, tradable commodities in the past. However, through tokenization, intangible assets such as rights to personal time or intellectual property can now also be transformed into liquid assets that can be easily bought and sold.

• Tangible assets: Physical assets that have real, measurable value, such as real estate or artwork.
• Intangible assets: Although they do not have a physical form, they are still valuable assets, such as intellectual property, future income, and carbon credits.

While the tokenization of tangible assets such as real estate and artworks is already groundbreaking in itself, what is even more exciting is the potential to bring intangible assets onto the Blockchain. These assets have often lacked suitable value exchange mechanisms in the past, but now, through tokenization, intellectual property, future earnings, and even personal time are creating entirely new markets, redefining the concept of value.

Imagine trading the future earnings of an emerging artist, investing in a groundbreaking medical discovery patent, or purchasing a portion of a rainforest's carbon offset potential. These previously difficult-to-quantify and trade intangible assets have now become tangible and liquid through tokenization.

3. The Current Status of Tokenization

This report is written based on in-depth research into the tokenization of real-world assets (RWA). The author found that activities in this field are much more active than most people imagine. This phenomenon is exciting, and it is hoped that it can attract more attention to the tokenization movement and its various projects.

Recent market predictions indicate that the tokenization market is facing explosive growth. By 2030, the market size of tokenized assets could reach between $2 trillion and $10.9 trillion, with this range depending on the trusted forecasting source. Real estate, debt instruments, and investment funds are seen as the main driving forces behind this growth and are expected to become the three major categories of tokenized assets.

1. The Impact of Tokenization

In the field of decentralized finance (DeFi), the impact of tokenization has begun to manifest. As of 2024, real-world assets have occupied an important position in DeFi, becoming the ninth largest sub-market, with a total locked value reaching $6.13 billion. This data indicates that investor confidence in tokenized assets is increasing, while also showcasing their important role in bridging traditional finance and DeFi.

2. Ecosystem Overview

The RWA ecosystem is rapidly evolving, giving rise to various projects that bring traditional assets onto the Blockchain. This field encompasses everything from tokenization of government bonds and securities, which are traditional financial instruments, to more innovative developments like tokenization of intellectual property. These projects aim to tokenize assets such as private credit, real estate, commodities, and high-value collectibles, showcasing the diversity of Blockchain technology in reshaping asset ownership and transaction methods.

This ecosystem is noteworthy because it has the potential to transform traditional markets. By enhancing accessibility, liquidity, and efficiency, these projects are changing the way financial markets operate. Whether it's enabling fractional ownership of high-end real estate, providing more opportunities for investment in artworks, or creating new ways to trade commodities, tokenization is continuously pushing the boundaries of finance and asset management. As the market matures, the integration between traditional finance and blockchain technology is also deepening, with stablecoins based on real-world assets serving as a bridge connecting these two fields. This dynamically evolving ecosystem reflects the tremendous potential of blockchain to fundamentally change our understanding of assets, their value, and the way they are traded in the global economy.