Tokenized Real World Assets: Blockchain’s Case for Better Capital Markets

The capital markets are one of the most important pillars of the modern economy and, in turn, society itself. By facilitating the free flow of capital, these markets enable innovation and progress to take place, creating new economic opportunities for everyone in the process. Not content with democratizing traditional capital markets over the past few decades, blockchain and fintech are now looking to catch up change radically them forever.

Traditional capital markets, while more efficient than the systems that preceded them, have long struggled to scale up. This is reflected both in terms of availability and their application to other types of assets. While the former is now partly solved with technology, the latter challenge still persists. Not only did legacy approaches make it difficult to achieve the level of “abstraction” required for efficient flow of real assets, but also to do so in a way that satisfied all interested parties.

This difficulty means that real-world assets such as real estate, commodities and art have not benefited from the same level of liquidity and efficiency as their intangible counterparts. This makes sense when considering the different ways these assets are used and the technical complexity of managing them. However, the lack of efficient capital markets for real-world assets represents a missed opportunity that was recognized long before blockchain was born.

This is where the tokenization capabilities of blockchain technology come into play. By “converting” real values ​​of digital tokens which can be traded on blockchain-based platforms, blockchain solves the technical challenges of the past. Not only is this approach to tokenization cost-effective and scalable, but it also does so in a way that ensures total transparency.

Tokens based on blockchain ensure that the provenance of the asset is linked to them cannot be counterfeited. This ensures that audibility, security and authenticity are no longer a concern for regulators and other players engaging in that market. In addition to each token being identifiable and traceable without the need to trust any particular authority, blockchain can also significantly increase liquidity.

In the report “Blockchain-enabled digital tokenization poised to transform commerce”, KPMG highlighted how “by creating more liquidity using blockchain tokens, the transfer of value is accelerated.” As pointed out by HSBC’s “The 10x potential of tokenization” report, the fractionation introduced by blockchain tokenization “has the potential to provide rise to a new demographic of investorscreates increased accessibility and expands the universe of available investment options.”

The panel “Crypto: A Better Capital Market for Real World Assets” was moderated by CryptoOracle Founder Lou Kerner put together with Souq co-founder and CEO JonPaul Vega and Maple co-founder and CEO Sidney Powell. Hosted by this year’s edition of Grit Daily House at Consensus, the panel touched on topics such as the unique challenges and opportunities of tokenization, the role regulation must play, and how their startups are helping to build better capital markets.

To learn more about what this panel of experts had to say about the past, present and future of NFTs, be sure to watch the video below or at Grit Daily’s official YouTube channel!