Tokenization, a way to record ownership of almost any asset on the blockchain, could transform the way we spend, save, and invest. It may be the biggest shift in the crypto industry since the launch of Bitcoin.
It would take major changes to our financial plumbing for tokenization to become the norm, but if it does, ownership records of everything from the dollars in your account to the roof over your head could move onto the blockchain.
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A token can represent a share in a company, part of a real estate property, or ownership of a piece of art. Blockchain tokens can be traded at extremely low fees almost instantaneously. Blockchains don’t follow office hours, so transactions can take place at any time of the day or night, without geographical restrictions. That would, for example, make it easier for a trader in Asia or Europe to buy U.S. assets. Tokens can be split into even smaller parts than fractional shares today allow, which could make investing more accessible to a wider group of consumers.
To give you an idea, leading global strategy firm McKinsey estimates the tokenized asset market could grow from $30 billion in 2024 to as much as $4 trillion by 2030. That said, it is one thing to identify a hot trend and another to include it in your portfolio, particularly when many of the companies involved are private. Here are two ways to invest in real-world asset tokenization.
Two blockchains that are already leading the emerging tokenized economy are Ethereum (CRYPTO: ETH) and Solana. Ethereum is the biggest, and Solana is among the fastest, and that’s helped them attract big financial institutions that want to issue tokenized assets.
Ethereum accounts for $15 billion of the tokenized assets in circulation today, over 55% of the total. The blockchain also hosts around $55 billion in decentralized finance (DeFi) funds, a separate but related metric that tracks assets locked in smart contracts.
If tokenization grows as McKinsey predicts and Ethereum captures even 20% of that $4 trillion market, we’re talking about $800 billion in tokenized assets flowing through the network.
Historically, there’s been a close correlation between Ethereum’s price and on-chain funds, so a surge in on-chain funds would likely boost its price.
