Blog

Why Tokenise Real-World Assets?

From real estate to fine art, tokenisation offers enhanced liquidity, breaks down investment barriers, and ensures certainty through security with smart contracts. Join the revolution reshaping how we perceive and interact with assets.

Arrow Left Icon
Back

Recently referred to by CitiGroup as “the killer use case of blockchain technology” the concept of real-world asset (RWA) tokenisation is gaining traction, This article explores how tokenisation is changing our perception and interaction with assets. From real estate to fine art, the ability to digitally represent real-world assets is reshaping traditional investment structures and unlocking opportunities for investors and asset holders alike.

Enhanced Liquidity

RWA tokenisation offers individuals and companies a fresh and cutting-edge approach to achieving access to liquidity that may not be accessible through traditional means. Through tokenisation, previously illiquid assets like cars or properties can transform into dynamic financial instruments, divided into multiple tokens representing fractional ownership. This division facilitates trading, attracting a broader investor base and nurturing more diversified portfolios. As a key objective of RWA tokenisation is to amplify liquidity, it is natural for its early adoption to occur within industries related to certain asset classes, such as real estate or artwork. Historically these asset classes have been illiquid, making them challenging to buy or sell without considerable time, effort, and investment. 

Overcoming the Barriers of Cost and Location

RWA tokenisation democratises investment by lowering the barriers to entry. Traditionally, investing in high-value assets required substantial capital and often excluded smaller investors from participating. However, by tokenising assets, individuals can now gain fractional ownership in these assets with minimal investment, expanding access to lucrative opportunities. At the core of this development lie two fundamental advantages: lower minimum investment requirements, and reduced administrative burden. Lowering minimum investment thresholds further broadens participation, as investors can now acquire fractional tokens instead of entire assets, opening doors to a more diverse investor base.

Additionally, the tokenisation process significantly diminishes the administrative burdens associated with traditional investments. By conducting transactions digitally and recording them immutably on the blockchain, paperwork, legal documentation, and administrative overhead are streamlined, translating into tangible cost savings for investors. 

Furthermore, traditional asset trading often encounters limitations within exchange market hours, constraining price discovery. By migrating assets onto the blockchain, flexibility and round-the-clock trading become possible. Moreover, asset tokenisation delivers enhanced flexibility and efficiency in trading. Unlike conventional exchanges with restricted market hours, tokenised assets can be traded 24/7, granting investors greater flexibility.

Tokenised Asset Benefits - Made Simple

Asset tokenisation has the potential to dissolve geographical barriers, enabling investors worldwide to participate in previously inaccessible markets. For example, The traditional trade of gold is constrained by the immobility of bars or coins posing a considerable obstacle due to restricted market accessibility. The central issues associated with this are the intricate matters of storage and transport. Beyond simple logistics, the concept of security comes into play along with geographical limitations. Gold markets are typically localised and the product itself is cumbersome and highly sought after making it difficult and impractical to travel with, however, the conversion of physical gold into digital tokens removes these restraints.

Certainty Through Security

Another significant advantage of RWA tokenisation is its ability to streamline asset management through the use of smart contracts. These self-executing contracts automatically enforce the terms of agreements between buyers and sellers, ensuring smooth transactions and eliminating the need for intermediaries, reducing costs and reliance on third-party companies. Smart contracts also have features that are essential for safe and transparent transactions, bolstering customer confidence. Integrated seamlessly, these contracts mitigate the risks associated with fraudulent activities and safeguard the integrity of transactions. 

Each transaction and contractual agreement is meticulously recorded on the blockchain, fostering transparency and audibility, while cryptographic techniques embedded within smart contracts fortify transactional security, rendering transactions immune to exploitation by malicious actors. With smart contracts, transactions are characterised by trustlessness, enabling parties to engage without the need for explicit trust, as reliance is placed on the inherent security of the blockchain network and the inviolable code of the smart contract. 

Conclusion

The ramifications of RWA Tokenisation for individuals and businesses are enormous and profound, offering heightened liquidity, accessibility, and efficiency in asset management while offering a myriad of real and undeniable benefits for users. 

Tokenisation is transforming our perception of and engagement with real-world assets. As this technology advances and evolves, the potential for RWA tokenisation to reshape the financial landscape truly knows no bounds.

THIS ARTICLE WAS INSPIRED BY DEFACTOR PODCAST EPISODE 8

Latest Posts

Why Tokenise Real-World Assets?

Why Tokenise Real-World Assets?

From real estate to fine art, tokenisation offers enhanced liquidity, breaks down investment barriers, and ensures certainty through security with smart contracts. Join the revolution reshaping how we perceive and interact with assets.

July 12, 2024

Defactor

Read More
Arrow Right Icon
Why You Should Care About Real-World Asset Tokenisation

Why You Should Care About Real-World Asset Tokenisation

Explore how asset tokenisation enhances liquidity, lowers investment barriers, and secures ownership with blockchain technology.

July 11, 2024

Defactor

Read More
Arrow Right Icon
The Rise of Real-World Asset Tokenisation

The Rise of Real-World Asset Tokenisation

Learn about the origins of Real-World Assets and explore its expansion into diverse sectors. Discover the future of tokenisation and its impact on businesses and investors.

June 13, 2024

Defactor

Read More
Arrow Right Icon
Real-Life or Virtual Marketing?

Real-Life or Virtual Marketing?

Explore the balance between digital and in-person strategies to market your RWA project, blending traditional approaches with innovative ideas.

May 28, 2024

Defactor

Read More
Arrow Right Icon
Where to Start When Marketing a Real-World Asset Ecosystem

Where to Start When Marketing a Real-World Asset Ecosystem

Explore key strategies for marketing an RWA ecosystem, focusing on building trust, engaging communities, and balancing technical innovation.

May 17, 2024

Defactor

Read More
Arrow Right Icon
Can I Tokenise My House?: The Answer Is Yes

Can I Tokenise My House?: The Answer Is Yes

Explore the transformative ability of real estate tokenisation, breaking barriers, unlocking liquidity, and fostering community engagement.

April 5, 2024

Defactor

Read More
Arrow Right Icon
The Challenges of Gold Tokenisation

The Challenges of Gold Tokenisation

Uncover challenges and opportunities in gold tokenisation, navigating trust, liquidity, and innovation in the dynamic digital economy.

March 22, 2024

Defactor

Read More
Arrow Right Icon
Defactor's Prediction: Asset Classes That Will Be Most Disrupted By Tokenisation

Defactor's Prediction: Asset Classes That Will Be Most Disrupted By Tokenisation

The experts at Defactor have spoken, providing their predictions on which asset classes could be most disrupted by tokenisation.

March 8, 2024

Defactor

Read More
Arrow Right Icon
Does Crypto Regulation Stifle DeFi Innovation?

Does Crypto Regulation Stifle DeFi Innovation?

Explore the complex interplay of DeFi innovation and regulatory frameworks, navigating challenges and opportunities for balanced growth.

March 1, 2024

Defactor

Read More
Arrow Right Icon
How to Bring Your Tokenisation Proof of Concept to Life

How to Bring Your Tokenisation Proof of Concept to Life

Unlock the potential of DeFi with our guide on bringing your tokenisation proof of concept to life. Define, research, architect, and begin your transformative journey.

March 1, 2024

Defactor

Read More
Arrow Right Icon
The Process and Challenges of Asset Tokenisation

The Process and Challenges of Asset Tokenisation

Explore the intricate world of asset tokenisation in this insightful article. Uncover the unique opportunities, challenges, and risks inherent in this ground-breaking concept.

February 23, 2024

Defactor

Read More
Arrow Right Icon
Key Aspects of Tokenisation

Key Aspects of Tokenisation

Discover the game-changing potential of asset tokenisation. Unveil the key factors - from technology to legal aspects - crucial for a successful tokenisation journey in the world of blockchain and investment.

February 9, 2024

Defactor

Read More
Arrow Right Icon
The Basics of Asset Tokenisation

The Basics of Asset Tokenisation

Unlock the future of investment with asset tokenisation. Explore the transformative power of blockchain technology, democratising access and enhancing liquidity in real-world asset management.

January 26, 2024

Defactor

Read More
Arrow Right Icon
How Defactor Uses The ERC-3643 Token Standard

How Defactor Uses The ERC-3643 Token Standard

Learn more about how Defactor uses the ERC-3643 token standard for asset tokenisation

January 24, 2024

Defactor

Read More
Arrow Right Icon
Defactor's Lending Pools Glossary

Defactor's Lending Pools Glossary

Gain comprehensive insight into the world of blockchain and decentralised finance (DeFi) with this educational glossary.

January 12, 2024

Defactor

Read More
Arrow Right Icon
Aspects of Projects that Benefit Most from Lending Pools

Aspects of Projects that Benefit Most from Lending Pools

Explore attributes for optimal DeFi lending pool integration, empowering projects to expand, engage communities, and navigate challenges.

December 29, 2023

Defactor

Read More
Arrow Right Icon
Real-World Assets and Lending Pools: A Perfect Match

Real-World Assets and Lending Pools: A Perfect Match

Explore tokenised real-world assets in DeFi lending—unlocking liquidity, expanding accessibility, and enabling diverse asset-backed loans.

December 15, 2023

Defactor

Read More
Arrow Right Icon
The Benefits of Lending Pools

The Benefits of Lending Pools

Explore DeFi lending pools—swift access to funds, passive income opportunities, and diverse pool types reshaping finance.

December 1, 2023

Defactor

Read More
Arrow Right Icon
Understanding Lending Pools and Their Role in DeFi Loans

Understanding Lending Pools and Their Role in DeFi Loans

Discover DeFi lending pools: reshaping finance through dynamic funds, global collaboration, and key elements like APY, collateral, and more.

November 17, 2023

Defactor

Read More
Arrow Right Icon
Engage | Staking & Governance

Engage | Staking & Governance

Defactor's Engage platform offers easy staking, governance participation, and attractive rewards for cryptocurrency users.

November 14, 2023

Defactor

Read More
Arrow Right Icon
SAP Digital Currency Hub

SAP Digital Currency Hub

This week we tested SAP’s newly announced Digital Currency Hub. We issued an invoice which was immediately approved and paid by our customer and settled and reconciled by our system all in one transaction using a public blockchain and a stable crypto currency.

July 6, 2023

Sharif Bouktila

Read More
Arrow Right Icon
The Basics of Factoring

The Basics of Factoring

Factoring provides cash flow by selling invoices, benefiting SMEs, but higher fees and credit risk exist. Defactor offers decentralised finance solutions.

May 24, 2023

Defactor

Read More
Arrow Right Icon
Why are real-world assets important to DeFi?

Why are real-world assets important to DeFi?

DeFi's growth faces hurdles due to volatility. Real-world assets (RWAs) can bridge the gap and drive mass adoption. Defactor simplifies RWA integration, accelerating traditional business adoption of DeFi.

May 24, 2023

Defactor

Read More
Arrow Right Icon
Previous slide
Next slide