Understanding Real World Asset (RWA) in Crypto
Real-world asset tokenization is the process of virtualizing real-world (tangible and intangible) assets into digital tokens that can be stored, managed and traded on a blockchain.
The entire concept of RWA tokenization is based on creating a blockchain-based digital investment solution for subjects that have value or a relevant physical existence.
So, instead of keeping the property rights for real estate, fine arts, equities or other valuable items on paper, its ownership is fully converted on-chain, where it can be easily traded, managed or shared.
The Advantages of Tokenizing Real-World Assets
The tokenization process allows the virtualization of the RWA ownership or legal rights in a crypto environment. But what are the real benefits of real-world asset tokenization?
From the business standpoint, the main gains of a solution built on real-world assets and blockchain include:
- Faster and more flexible asset trading and exchange, which are not tailored to the “9 to 5” business shifts;
- Increased liquidity, which means larger profits;
- A larger pool of clients and investors due to the lower entry barrier;
- Improved system security and trustability;
- Enhanced business competitiveness.
At the same time, the RWA tokenization can benefit asset owners, investors and traders by providing:
- Greater accessibility, as the only things needed to trade RWA tokens are the Internet connection and a digital wallet;
- Allowing for lower fees and commissions, that only involve the minimal gas fees to instantly transfer the RWA tokens;
- Reducing risks for assets sharing or trading due to the secure and transparent RWAs trading environment;
- Facilitating asset exchange, storage and management within a decentralized system;
- The direct trading mechanism involves only a seller and a buyer, and removes any other intermediaries (financial institutions or banks, appraisers, notaries, or any other related authority).
Therefore, the numerous benefits of real-world asset tokenization have proven the value and long-term prospectiveness of this technology in the crypto landscape.
