Bittime - In the midst of rising prices of many cryptocurrencies, there is another development that is no less interesting: the tokenization of real world assets (RWA). In this article, we will discuss more about RWA and the benefits of asset tokenization.
Let's discuss what this development means and the advantages offered by asset tokenization. To understand this, we need to change the way we view the digital asset ecosystem.
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What is RWA?
RWA is an abbreviation of Real World Asset , which means Real World Asset . These are tangible assets that physically exist in the real world, not just in the digital world. Examples of real-world assets include property, commodities, works of art, even US government bonds (US Treasuries).
Also read: Crypto and Real World Assets (RWA): Top 10 RWA Coins
Real-world assets constitute an important part of global financial value. For example, global property values in 2020 reached $326.5 trillion and gold market capitalization reached $12.39 trillion.
Despite its huge role in traditional finance, real world assets have not been widely utilized in the world of DeFi (Decentralized Finance) . Therefore, there is an opportunity to integrate real-world assets into the world of DeFi.
In doing so, liquidity will increase and new asset classes emerge that DeFi participants can utilize to earn investment returns.
Additionally, investments in real-world assets are expected to have returns that are less affected by the volatility of crypto prices.
In fact, there is increasing interest in bringing US Treasuries onto the blockchain (on-chain), so that investors have a low-risk method for earning returns.
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A View On Current Assets
Often we hear questions like: "What is the price of Ethereum?", "How correlated is the digital asset with other asset classes?", or "What portion should be allocated to digital assets in an investment portfolio?". These questions are interesting, but they all focus on digital assets as an asset class in their own right.
Also read: What is Real Estate Tokenization in Cryptocurrency?
Another view we can take is to view blockchain networks (e.g. Bitcoin, Ethereum, or Solana) as digital infrastructure. Much like TCP/IP or POP3/SMTP are protocols for building and commercializing services, digital asset networks are the foundational layer on which financial services (and other services) can be implemented and offered.
Asset tokenization is one example. In short, asset tokenization means using a distributed network and the databases that are components of that network to record interactions between parties.
A clear example seen in recent years is the emergence of stablecoins, namely tokens whose value is pegged to the US dollar.
There are many ways to create stablecoins. One popular model is to accept US dollar deposits, usually invested in US government bonds (US Treasuries).
Then, US dollar tokens are issued and their value is guaranteed by ownership of those bonds (e.g. USDC, USDT). The total outstanding value of stablecoins is currently around US$150 billion, up from almost zero five years ago.
Also read: What are Stablecoins?
This concept has proven successful, and now the question is: If the US dollar can be tokenized, why can't other currencies or assets? This is the essence of the asset tokenization trend.
Another example is the US Treasury. Currently, there is about US$750 million in tokenized US Treasuries, up from almost zero in just two years. These tokenized T-bills have one advantage over stablecoins: they can generate and provide returns.
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In general, tokenized assets offer the potential for 24/7 trading, faster settlement times (T+0), and wider accessibility because they can be accessed by anyone with a mobile phone.
These examples, including tokenized gold, show how digital asset networks are used as the underlying digital infrastructure to provide financial services.
Looking at it from this perspective, we can think about what other value-added services can be provided through digital asset infrastructure, instead of simply measuring the success of these networks based on the price of their native cryptocurrency.
'The ideal result of using this technology is a financial system that is faster, cheaper, more transparent and more accessible for all.'
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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.
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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.
Also read:
HomeCoin: An Innovative Real-World Asset (RWA) Based Stablecoin
Understanding the Role of Real World Assets (RWA) in Stablecoin Development
Complete Guide on How to Tokenize Real World Assets (RWA) in 2024
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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