Tokenization of illiquid assets could become a $16 trillion industry in the coming years, according to a report by The Boston Consulting Group. However, the impact of tokenization extends beyond financial figures and has the potential to solve real-world problems in developing countries.
During a panel discussion at the Swiss Web3 Fest, industry experts discussed how tokenization can be applied to real-world assets and the unprecedented solutions it enables. Christoph Mussenbrock from decentralized insurance protocol Etherisc highlighted the benefits of tokenization for agricultural production in Kenya. He explained that tokenization allows farmers to receive immediate payouts based on the actual yield of their harvest, which is significantly faster than waiting six months for traditional insurance payouts. This not only helps farmers avoid financial hardship but also ensures the survival of their businesses.
“There’s an increasing demand from traditional insurance companies for on-chain solutions. That is a huge change. We see that traditional insurance companies are somehow dipping into this,” Mussenbrock emphasized.
Stephan Rind from BrickMark Group emphasized that asset tokenization can provide access to financial products that are currently unavailable to many individuals, thus bridging the gap in wealth distribution. He stated, “Number one in financial inclusion, obviously you can have a number of participants that can participate in a financial instrument, and you have the democratization of capital […] everything from real estate to animals, to all the things that you can have in traditional finance, that could actually be tokenized and represented in a digital financial instrument.”
Carlos Mazzi from Finka shared his experience of tokenizing La Pradera, a cattle ranch in Bolivia. He described the tokenization process as the “conversion of grass into protein, and into cash through a great nature given machine, which is a cow.” Mazzi acknowledged the challenges they faced in terms of financial engineering and legal frameworks but expressed optimism about the future market adoption of tokenization.
The panelists also discussed the future of tokenization. Rind believes that the widespread adoption of central bank digital currencies (CBDCs) will play a crucial role in driving the adoption of tokenization. He predicts that CBDCs will create billions of people with digital wallets, leading to increased participation in the token economy. Furthermore, the panelists agreed that regulation will also play a key role in unlocking more capital for asset tokenization.
“Ten years from now, most people will be interacting with tokens on a daily basis, whether they are aware of it or not,” said Jose Fernandez from Tokengate, emphasizing the long-term potential of tokenization.
Overall, the panel discussion highlighted the transformative potential of tokenization for real-world assets and its ability to address various economic and financial challenges. As the industry continues to grow, tokenization is expected to play a major role in shaping the future of finance and wealth distribution.
Sources:
– [Cointelegraph](https://cointelegraph.com/news/tokenization-of-illiquid-assets-to-reach-16t-by-2030-report)
– [Image](https://s3.cointelegraph.com/uploads/2023-09/925ff42e-ee40-4a7e-bb08-058ad9930580.jpg) (source)
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I've been involved in the cryptocurrency world since 2016 and trading since 2019. I started Moon and Lambo in 2021. I'm passionate about crypto and love to share my knowledge. I hate bankers and I hope that cryptocurrency will change the financial world for the better. View full profile...
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