This Crypto Sector Will Grow to $16 Trillion, Here’s How
The world of crypto-assets has seen significant growth in recent years, with the total market capitalization reaching over $3 billion in November 2021. A new sector of the cryptocurrency industry is poised to continue the trend and explode in terms of growth.
According to the decentralized finance expert under the pseudonym “Edgy,” the real-world asset sector (RWA) is set to change the course of the nascent industry. Edgy believes that the real asset sector could reach a market value of $16 trillion by 2030, which could catalyze cryptocurrencies into the mainstream.
What is the Crypto Real-World Asset Sector?
The real asset sector uses blockchain technology to tokenize real-world assets such as real estate, commodities and other physical assets. Tokenization means converting ownership of an asset into digital tokens, which can be traded on a blockchain-based platform, making the asset more accessible to a wider range of investors.
To tokenize an asset in the real world, a digital representation of the asset is created on a blockchain-based platform. This digital representation is divided into smaller units, or tokens, that investors can buy and sell. Once the asset has been tokenized, it can be traded on a cryptocurrency exchange like any other asset.
With that said, Edgy suggests that certain factors could act as “catalysts” to drive the growth of the real asset sector towards the goal of reaching $16 trillion by 2030. Here are some of them:
- Amazon’s NFTs are rumored to be tied to real-world assets. The American multinational giant is reportedly planning to launch its own NFT platform, which could be linked to real assets.
- Also, Goldman Sachs launched GS Dap to tokenize traditional assets. GS Dap is a blockchain-based platform launched by the leading financial institution that allows traditional assets, such as loans and bonds, to be tokenized and traded on a blockchain-based platform.
- Additionally, technology company Siemens issued a $60 million bond tokenized on the Polygon Network. This bond was the first corporate bond issued using blockchain technology, demonstrating the potential of blockchain-based platforms for the real-world crypto and asset sectors.
The “catalysts” mentioned earlier are perhaps only a small part of the real asset sector’s potential and its ability to grow and influence various aspects of the global economy. According to Jeremy Allaire, CEO of Circle, tokenized property and contracts are likely to become commonplace in the next 5-10 years.
Allaire’s comments followed news that Homebase, a company specializing in tokenized real estate, had sold out its first tokenized rental property on the Solana blockchain in less than two weeks.
What are some additional benefits to the crypto industry of RWA
In addition to the potential for growth within the cryptocurrency industry, Edgy emphasizes the benefits to the real asset sector, such as cost savings, increased accessibility for smaller investments, and improved access to funding through tokenized assets.
By tokenizing assets, the RWA sector allows direct ownership and trading of assets, cutting out middlemen such as brokers and other rent seekers. If an investor cannot buy a whole property, they can buy a small part.
In addition, tokenized assets can be used as collateral for loans, which can help businesses that may have difficulty accessing traditional forms of financing, which is beneficial for businesses in emerging markets, where access to capital may be limited.
Overall, the sector’s benefits include increased availability and liquidity of traditionally illiquid assets, lower transaction costs and greater efficiency in buying and selling assets. As the sector continues to evolve, more benefits are likely to emerge, further driving the growth and adoption of the crypto sector.
Featured image from Unsplash, chart from tradingView.com
