In five to ten years, says Cynthia Wu, co-founder of digital asset services platform Matrixport, every “real-world” asset class could be tokenized in the form of a non-volatile token (NFT).
Speaking to Cointelegraph, Wu said that the best case for NFTs would be the broad representation of real-world assets that can be stored and traded on-chain:
“Finally, all major financial asset classes will be represented on this new financial infrastructure [and] NFTs can be our tool to represent off-chain assets such as real estate documents, stocks or bonds.
The on-chain move will make these real-world assets “more liquid and more tradable,” which will improve price discovery and transaction activity, Wu added.
But while the creation of more than two trillion digital native assets from Bitcoin (BTC), Ethereum (ETH) and other tokens is great, he says the only place where NFT trading has generated activity has come from digital. Aggregation – Institutional Adoption Not Really Helped:
“We’re not seeing off-chain assets being represented on-chain. […] We are now only in the 3-5 percent range.
However, Wu is sure that the tide will change.
Earlier this month, a report from the Boston Consulting Group (BCG) estimated that the total amount of illegal assets will reach $16.1 trillion by 2030.
BCG predicted that most of this token will come from pre-initial public offering (IPO) stocks, real estate, private debt and proceeds from small to medium-sized businesses.
However, while simulating real-world assets has sparked interest from financial institutions, Wu says some have been reluctant to move on from legacy systems that have served them well over the years.
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The traditional financial system does not allow for the trading of non-perishable assets because they cannot be easily exchanged or distributed, but tokenization on the blockchain provides a solution to this.
He also pointed out that blockchain infrastructure is a superior alternative to legacy systems, improving cost efficiency, improving liquidity, 24/7 market access and eliminating middlemen are key factors leading to a streamlined financial system.
Matrixport was established in February 2019 and currently manages $3-4 billion in digital assets from a diverse mix of retail and institutional clients.