The Next Phase of Crypto Development: Tokenization of Real World Assets
According to technology theorist Carlota Perez, the next phase of substantive crypto development may involve the tokenization of real world assets (RWAs). This concept is based on the idea that technology is adopted in predictable waves, with periods of growth followed by crashes and then long periods of growth again. We have seen this pattern in the past, such as with the dot-com bubble in 2001.
Currently, Web3 technologies like decentralized finance (DeFi) and non-fungible tokens (NFTs) have installed the infrastructure for a new financial system, but their use has mostly been limited to digital assets. However, the tokenization of RWAs has the potential to unlock a new golden age in blockchain and traditional finance.
Traditional finance giants like BlackRock and Fidelity, as well as RWA startups like Tzero and Securitize, are already using blockchain to tokenize assets like commodities, fine art, real estate, and financial instruments. This reduces the role of intermediaries and enables faster, cheaper, and more transparent transactions.
However, current RWA tokenization platforms still require trust in intermediaries to honor the redemption of tokenized assets. To address this, protocols can lock up parties’ commitments to execute a commercial exchange as a forward contract encoded within smart contracts. Disputes can be handled by decentralized dispute resolvers, ensuring trust-minimized tokenization.
By fully utilizing Web3 technologies to harden tokenized assets, we can create a programmable economy with trillion-dollar opportunities. This will not only revolutionize finance but also enable a new era of economic growth and transformation.
Hot Take
The tokenization of real world assets has the potential to unlock a new golden age in both blockchain and traditional finance. By reducing the role of intermediaries and ensuring trust-minimized tokenization, we can create a programmable economy with limitless possibilities. The future of crypto lies in the tokenization of real world assets, and we are just beginning to scratch the surface of its potential.
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