RWA or Real-World Assets are assets that exist in the real world, such as property, bonds, shares or foreign currency. RWA is different from crypto assets that only exist in the digital world, such as Bitcoin, Ethereum, or stablecoins.
RWA has a more stable and measurable value, and is more easily accepted by the wider community.
However, RWA also has its own challenges, especially in terms of accessibility, liquidity and verification. How to connect RWA with the world of crypto, which is based on transparent, fast and cheap blockchain technology?
How to ensure that the RWA offered on a crypto platform actually exists and is valid? How to generate revenue from RWA without sacrificing security and flexibility?
This is the focus of many projects operating in the RWA sector. They are trying to create protocols that can connect RWA with DeFi or Decentralized Finance, namely a financial ecosystem that runs on blockchain.
In this way, DeFi users can gain access to a variety of assets that were previously difficult or expensive to access, and earn attractive returns.
One example of RWA that is currently popular is FX forwards or foreign currency futures contracts. FX forwards are an agreement between two parties to buy or sell a certain amount of foreign currency at a certain date and price in the future.
FX forwards can be used to protect the value of assets from exchange rate fluctuations, or to speculate on foreign currency movements.
FX forwards have great potential to become an RWA of interest to DeFi users, for several reasons:
- FX forwards provide access to a very large and liquid foreign exchange market, with transaction volumes reaching trillions of dollars per day.
- FX forwards provide an opportunity to profit from interest rate differences between two currencies, which can reach tens of percent per year.
- FX forwards provide protection from inflation risks, especially in developing countries experiencing high price increases.
- FX forwards provide portfolio diversification, as they have low correlation with other crypto assets.
However, FX forwards also have their own challenges, especially in terms of implementation, standardization and regulation. How to create FX forwards contracts that can be executed automatically and securely on the blockchain?
How to determine fair and transparent pricing and liquidity of FX forwards? How do I comply with the legal and tax regulations that vary by country?
This is a challenge for RWA developers, who have to work together with various parties, such as banks, exchanges, regulators, auditors and lawyers. They must create solutions that can overcome these obstacles, as well as provide incentives for all parties involved.
One project that is working to make RWA based on FX forwards a reality is Witness, which recently raised $3.5 million in funding. Witness is a protocol designed to provide digital verification and ownership using existing blockchain technology.
Witness allows users to obtain proof of their data that can represent things like FX forwards, signed by two different parties.
“That data can be used by any application because they can verify it even if it's not completely posted on the blockchain,” said Joe Call, co-founder of Witness, in an interview withBlockworks.
Witness will use this latest funding to continue scaling its engineering team, Call said.
How To Buy Crypto With Bittime
You can buy and sell crypto assets in an easy and safe way via Bittime. Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappbeti.
To be able to buy crypto assets on Bittime, make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into your wallet . For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application.
Monitor price chart movements of Bitcoin (BTC), Ethereum (ETH), Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.
Read also:
What Are Real World Assets (RWAs)?
What is a Digital Asset Ecosystem?
DISCLAIMER: This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.
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