How Blockchain Technology Unlocks Liquidity for Real-World Assets

Blockchain stands at the forefront of disruptive technologies. Its transparency, security, and cost-efficiency have benefited many industries like supply chain and payments in taking the next quantum leap. However, there has been minimal traction in the $360 Trillions1 Real-World Assets (RWA) market including intellectual property, commodities, and other assets. The marketplaces for these assets are fragmented and full of frictions resulting in the lack of liquidity and interests from both asset owners and investors. Seeing the size of market opportunity, blockchain platforms emerged with promising solutions involving asset tokenization. By leveraging smart contracts and blockchain technology, RWA can be turned into digital tokens resulting in greater access to exposure and liquidity. 1Real World Asset value is estimated to be $256T in 2018 and applying 5% annual growth until 2025 (Futurism article based on Credit Suisse figures) Bringing Real-World Assets to Life Let’s pick an example of commodities. Every bar of gold, barrel of oil, and inch of real estate have a combined value of $510+ trillion as of 2021 according to a recent McKinsey Global Institute Report. However, only a fraction of those assets are considered liquid. For RWA to have liquidity, the ownership stake has to be distributed, similar to how companies raise massive amounts of money when they issue an IPO. With blockchain, the assets become represented as toke...