Unveiling The Rise of Real World Asset Tokenization: Exploring Trends in Art, Real Estate, and Metal

Real World Asset (RWA) tokenization is viewed by many as a completely new paradigm in the global economic system - how we buy and sell items, preserve wealth, and accept payment for services rendered. Tokenization could be a $10 trillion industry by 2023.

It means that any asset can be digitized and placed for sale on a blockchain, which helps to facilitate global access for a given asset. So there are no closed doors, and it provides many alternative financing options for owners.

RWA Tokenization In Art

Art is known to be a highly illiquid asset. Imagine a famous work of art worth millions of dollars. Instead of this piece of art being owned by a single high-net-worth (HNW) individual,  it could be owned by thousands of individuals and put to a more communal use. Each individual would have a much smaller upfront investment.

Digital art (which is also a real-world asset) can also be tokenized. So graphics designers who make images can tokenize them and distribute them to audiences. The tokenization of images and videos also allows the original creators to retain ownership of their works of art, which is an added benefit in an industry where agencies can take a large share of the profits.

Five NFTs of Andy Warhol were sold for a total of $3.4M from an auction. The NFTs were minted from five preserved records of Warhol’s work in 1985, recovered from floppy disks.

RWA Tokenization In Real Estate

Real estate offers huge potential for RWA tokenization. Long heralded as a bastion of wealth and a highly illiquid yet stable asset, real estate can now be tokenized and fractionalized. This means that a multi-million dollar mansion can be purchased by a group of interested investors, with each person owning perhaps 1% of the property.

Alternatively, a large multi-family residential unit can be group-owned, offering rental income proportional to the tokenized shares in the property, with near-zero red tape and instant transfer. Real estate is known for stable income, and no longer do investors need to own the property outright Real estate funds can also be tokenized. This makes it much easier for the underlying investors to trade them.

Propy is a prominent example of live real estate tokenization, with a fully integrated marketplace for buyers, sellers, and agents. Home addresses can even be minted on the blockchain and the title is registered with the local authorities for a 100% compliant transaction.

EstateX, recently backed by Brock Pierce and named the RWA tokenization project of the year in 2023, is also making moves toward real estate tokenization mass adoption.

RWA Tokenization In Metals

Precious metals, the stalwart of the monetary system, can also be tokenized. 50 years ago the US dollar was de-pegged from gold, but there is a growing appetite to once again see precious metal-backed currencies.

Some metals are very hard to invest in. Gold costs $2,100 for an ounce at present. Silver is more affordable, at $25. But it's still hard to transfer and store physical items. With asset tokenization, such metals can be fractionalized and represented as cryptocurrencies. This means they are easy to trade and the minimum investment is quite low.

BlockApps is one example of a real-world asset provider that is offering fractionalized silver, through the Mercata marketplace. This helps to democratize access, and the cost for a troy ounce is $26 ($1 above spot). Collectible textile products and shoes are also sold through the Mercate marketplace as fractionalized NFTs. The company has previously worked with Microsoft, Ticketmaster, and BHP Hilton.

Where Does RWA End?

Ultimately, it’s conceivable that practically every asset will have a token equivalent. Tokenization has no real downsides and a plethora of advantages. The main issue right now is with regulation and compliance. Red tape is a huge challenge and legal authorities are known to move very slowly.

However, innovation in RWA is at unprecedented levels, and the public at large can benefit massively from asset tokenization, as well as institutions and commercial enterprises. It makes the asset much easier to invest in and opens up alternative revenue streams for asset owners. It can also create entirely new markets for investors.

Even banks such as HSBC are nowstarting to tokenize assets, and are finally starting to come onboard to blockchain. The idea of tokenizing every item listed on a balance sheet is plausible, with commodities, art, and real estate being the sectors where the most progress has been made.