The Boston Consulting Group estimates the tokenization of real-world assets could become a $16 trillion industry in the coming years. Its impact, however, goes well beyond financial figures, and can help people in developing countries to find new ways to deal with real-world problems.
During a panel moderated by Cointelegraph’s editor-in-chief Kristina Lucrezia Cornèr at Swiss Web3 Fest, industry experts provided insights into how tokenization can be applied to real-world assets, and how it is enabling solutions never seen before.
“Our farmers, in Kenya, receive their payouts days after the harvesting season ends. If they have less yield than expected, then they receive a payout immediately. In the traditional insurance space, they need to wait six months. And that can mean the end of a family‘s business,” explained Christoph Mussenbrock from decentralized insurance protocol Etherisc about tokenization solutions for agricultural production.
— WEB3FEST (@web3fest_int) September 16, 2023
According to Mussenbrock, there’s an increasing demand from traditional insurance companies for on-chain solutions. “This is currently happening as we speak. That is a huge change. We see that traditional insurance companies are somehow dipping into this.”
Stephan Rind, from BrickMark Group, noted that asset tokenization can deliver access to financial products that are currently unavailable to most people, thus helping to close a gap in wealth distribution.
“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,” Rind commented.
Carlos Mazzi, from Finka, shared his experience of tokenizing La Pradera, a cattle ranch in Bolivia with 3,000 hectares of grassland and over 3,500 cows. “We tokenize the value creation of what we call from grass to cash. It’s the tokenization of value creation. The conversion of grass into protein, and into cash through a great nature given machine, which is a cow. We were early pioneers and this was very challenging […] it represented a lot of financial engineering, legal framework, etc. to create a revenue token. So it has been fantastic […] The only thing that has not developed the way we anticipated is the market adoption, and it’s a systemic issue that, we hope, will be corrected eventually.”
The adoption issue will be overtaken by central bank digital currencies (CBDCs), believes Rind. “It will create billions of people in the world which have a wallet,” he noted, adding that regulation will also unlock more capital into asset tokenization.
“We believe that in ten years’ time most people will be interacting with Tokens on a daily basis, whether they know it or not,” added Jose Fernandez, from Tokengate.
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