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Tokenization of Illiquid Assets will Reach $16T by 2030

With the help of cryptocurrencies, any physical asset can be tokenized. This means that first of all a pre-evaluation of the price of this asset is done and the value of the asset with its main properties and characteristics is recorded in the blockchain. 


Thanks to tokenization, you can track all information about an asset, its movement, sales, and the owners of the asset. Tokenization allows you to monitor the logistics of an asset, its movement and other required details. 


Also, thanks to tokenization, it is possible to sell a part (share) of an asset, thanks to which tokenization is widely used for low-liquid assets. 


According to the  Boston Consulting Group (BCG), the total amount of tokenized illiquid assets, including real estate and natural resources, could reach $16.1 trillion by 2030.


According to the authors of the report, most of the world's wealth today is concentrated in illiquid assets.



Illiquid assets include: 

  • shares before the initial public offering (IPO), 

  • real estate, 

  • private debt, 

  • income from small and medium-sized businesses, 

  • art and collectibles, 

  • exotic drinks, 

  • private funds, 

  • wholesale bonds, 

  • rare and unique items and much more.


The main reasons for the illiquidity of assets are:

  • limited availability of assets for mass investors, 

  • lack of experience in managing such assets, 

  • limited access to them, for example, due to their very high cost, rarity and uniqueness, 

  • regulatory obstacles and 

  • other cases due to which simple buyers cannot buy an asset, for example, its location.


Tokenization of illiquid assets allows us to solve the problem. Thanks to digital tokenization and recording the value of assets on the blockchain, these assets become available to millions of users. 


Retail investors can buy tokenized assets in parts, thanks to which the liquidity of assets increases significantly and they become available to people all over the world. The tokenized asset market exceeded $2.3 billion in 2021 and is expected to reach $5.6 billion by 2026.


Over the past two years, the daily volume of global trade in digital assets has grown from 30 billion euros in 2020 to 150 billion euros in 2022.


By 2030, the illiquid asset market is expected to reach $16.1 trillion. Among the illiquid assets are financial assets (insurance policies, pensions and alternative investments), equity and other tokenized assets (infrastructure projects, fleet and patents).


Tokenization of assets makes it possible to eliminate many of the existing barriers to illiquidity of assets, making them accessible to the entire population of the planet.


Real estate could become one of the illiquid assets that could benefit from tokenization as investors look for investments backed by real assets in DeFi.


Conclusion


Thanks to tokenization, the minimum size of an investment ticket for investments in the private market can be reduced to $1, expanding access to a much larger segment of accredited individual and corporate investors.


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