The tokenization of real assets, or Real World Assets (RWA), refers to the digitalization of physical assets, such as a work of art, real estate, with which one wishes to make a profit.

It is the tokenization of tangible assets through blockchain technology; that is, everything that can be traded. The trend is on the rise this year and promises dividends to investors. “This process is similar to dividing a large asset into smaller, more accessible parts, allowing more people to participate in its ownership and investment. A common example is the tokenization of a building: instead of a single person or entity owning the asset, digital tokens representing parts of the property’s value can be acquired by many investors.”

In the process, the first step is the identification and valuation of the asset to be tokenized. This value is then divided into digital tokens, a fraction of the total that becomes fractional to allow the purchase in small parts.

Then, the second step is to comply with the laws and regulations that are represented through special purpose vehicles. They allow guaranteeing the correct backing of the asset and that it is transferable according to local laws.

The creation of smart contracts for this commercialization is the third step. They are executed, as is known, through the blockchain in an automatic and secure manner.

The fourth step is the selection of the blockchain platform for the issuance and management of the tokens. The Ethereum, Polygon, and Solana platforms are known, among others.

M.Pino

Source: cripto247

(Reference image source: Shubham Dhage in Unsplash)

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