Almost anything could be tokenized in 5-10 years — Matrixport Co-Founder
Within five to ten years, nearly every “real world” asset class could be tokenized as a non-fungible token (NFT) according to Cynthia Wu, co-founder of the asset servicing platform Matrixport digital.
Speaking to Cointelegraph, Wu said the best case for NFTs would see the widespread representation of real-world assets to be stored and traded on-chain:
“Eventually, all major financial asset classes will be represented on this new financial infrastructure. [and] NFTs could be our instrument to represent off-chain assets like real estate deeds, stocks or bonds.
Going on-chain would make these real-world assets “more liquid and tradable,” which would improve price discovery and transaction activity, Wu added.
But Wu said while it’s great that we’ve created over two trillion native digital assets on-chain from Bitcoin (BTC), Ethereum (ETH) and other tokens, the only niche to have generated NFT transaction activity came from digital collectibles – which didn’t really help institutional adoption:
“We haven’t really seen off-chain assets represented on-chain […] we are now really only in the first 3-5%.”
Nevertheless, Wu is convinced that the tide will turn.
Earlier this month, a Boston Consulting Group (BCG) report estimated that the total size of tokenized illiquid assets will reach $16.1 trillion by 2030.
BCG predicted that much of this tokenization would come from pre-IPO shares, real estate, private debt, and revenue generated by small and medium-sized businesses.
However, while the tokenization of real-world assets has attracted interest from financial institutions, Wu said some are a little reluctant to abandon the legacy systems that have served them well over the years.
Related: Asset Tokenization: A Beginner’s Guide to Converting Real Assets to Digital Assets
Wu pointed out that the traditional financial system has disregarded the exchange of non-fungible assets because they cannot be easily traded in the same way as a fungible or divisible asset, but tokenization on the blockchain provides a solution to this.
She also argued that blockchain infrastructure is the superior option to legacy systems, citing cost effectiveness, improved liquidity, 24/7 market access, and the removal of intermediaries as the main factors that would lead to a more streamlined financial system.
Matrixport was established in February 2019 and currently manages between $3 billion and $4 billion in digital assets from a wide range of retail and institutional clients.