The tokenized asset market will reach $19 trillion in just 8 years, says Ripple.

Tokenized assets promise to revolutionize the way we interact in the financial world. Tokenization, which allows any asset to be converted into a digital representation, is poised to radically transform the economic landscape.

According to a recent report prepared by Ripple, in collaboration with Boston Consulting Group, The tokenized asset market is projected to experience explosive growth, reaching a staggering $19 trillion in just eight years. This rather optimistic forecast reflects the growing adoption of blockchain technology and demonstrates the confidence that large financial institutions are placing in this innovation.

Tokenization is a process that is opening the doors to a world where Stocks, bonds, real estate and other assets can be fractionalized and traded with unprecedented ease.This not only increases liquidity and accessibility, but also offers a level of traceability and automated compliance that is unattainable in traditional markets.

With financial giants like BlackRock, Fidelity, and JPMorgan already exploring this avenue, tokenization is poised to become a fundamental pillar of the digital economy. In this context, it is crucial to explore the factors driving this growth and how tokenization could redefine global finance in the coming years.

What is asset tokenization and why is it booming?

Tokenization, in essence, is the process of digitally representing a real-world asset—such as real estate, stocks, bonds, art, or even intellectual property—on a blockchain through a token. This token, which can be fractional, represents some or all of the underlying asset's value. Imagine, for example, a Picasso painting divided into thousands of tokens, each representing a small portion of the work. Thanks to tokenization, investors of all sizes could participate in the ownership of a work of art like this, which would otherwise be inaccessible through traditional means.

To better understand tokenization, consider the analogy of casino chips. Each chip represents a specific monetary value, even though the chip itself is not money. Similarly, a token digitally represents the value of an underlying asset, allowing it to be transferred and traded on a blockchain. This digital representation makes it easier to divide the asset's value into smaller units, with each unit becoming an individual token.

But Why is tokenization gaining so much traction? The answer lies in its multiple benefits. First, tokenization increases liquidity of assets. By allowing tokens to be easily fractionalized and traded on digital markets, buying and selling is facilitated, reducing friction and attracting a wider audience.

Second, tokenization improve efficiencyBlockchain enables faster, cheaper, and more transparent transactions, eliminating intermediaries and reducing operating costs. Third, tokenization increases accessibility. That is, it allows retail investors to participate in markets that were previously reserved for large institutions, democratizing access to investment. Finally, tokenization improves transparency, allowing all transactions to be immutably recorded on the blockchain, increasing trust and reducing the risk of fraud.

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In addition to the benefits mentioned above, tokenization facilitates the creation of new financial products and servicesFor example, it enables the creation of tokenized investment funds that offer investors exposure to a diversified portfolio of assets. It also allows for the creation of tokenized rewards programs that incentivize customer participation and loyalty.

In short, tokenization opens up a world of possibilities for financial innovation and value creation.

The current and projected size of the tokenized asset market according to Ripple

El report Ripple and BCG's research reveals a promising outlook for the tokenized asset market. The market is currently estimated to be around $600.000 billion in size. However, projections suggest that this market will experience exponential growth in the coming years, reaching $19 trillion by 2030This growth represents an impressive compound annual growth rate (CAGR), demonstrating the enormous potential of tokenization.

This growth is not just an optimistic prediction; it is supported by several key factors. The growing adoption of blockchain, rising interest from financial institutions, maturing technological infrastructure, and rising investor demand for more liquid and accessible assets are some of the drivers driving this expansion. Furthermore, regulations are evolving to accommodate tokenization, providing greater clarity and legal certainty for market participants.

"Tokenization is transforming financial assets into programmable and interoperable tools, recorded on shared digital ledgers. This enables 24/7 transactions, fractional ownership, and automated compliance.", said Tibor Merey, managing director and partner at BCG

The report highlights that tokenized assets are currently moving from low-risk adoption to integration into the real economy, which will drive their future growth exponentially.

Financial institutions and industry leaders supporting tokenization

The backing of large financial institutions and industry leaders is a key indicator of the potential of tokenization. Larry Fink, CEO of BlackRock, has stated that the tokenization of asset classes offers the prospect of Drive efficiencies in capital markets, shorten value chains, and improve cost and access for investorsHis statements about this innovation, given that he is one of the most influential leaders in the world of finance, underscore the strategic importance of asset tokenization in financial markets.

Likewise, Larry Fink's stance on this innovation reflects a significant shift in the way traditional financial institutions perceive cryptocurrencies and blockchain technology. Initially, many of these institutions were skeptical or even hostile toward this new financial paradigm. However, as the technology has evolved and its benefits have been demonstrated, they have begun to adopt a more open and proactive stance.

However BlackRock is not the only institution that is betting on tokenization. Other companies such as Deloitte, Franklin Templeton and JP Morgan are also actively exploring the opportunities this technology offers. JP Morgan, for example, has its own blockchain platform called Onyx, which is used to tokenize assets and facilitate cross-border payments. Franklin Templeton has launched a tokenized money market fund that allows investors to earn returns in the form of digital tokens, while Deloitte has been exploring and analyzing different use cases, such as loyalty tokenization, real estate, and financing.

In addition to the institutions mentioned, other companies such as Goldman Sachs, BNP Paribas and State Street They are also actively exploring tokenization, investing in the technology, developing use cases, and collaborating with blockchain startups to drive adoption.

The interest of all these and other institutions in asset tokenization validates this innovation as an unstoppable market trend. Their active participation in the market also demonstrates that tokenization has moved from being a marginal idea to a strategic priority for the world's leading financial institutions.

Efficiencies and opportunities in various industries

The transformative potential of tokenization extends to a wide range of industries beyond finance, offering innovative efficiencies and opportunities to sectors such as real-estate, where tokenization allows for fractionalizing property ownership, simplifying management processes, facilitating investment and increasing liquidity; or, to the world of , which allows artists to sell fractions of their works to a wider audience, generating new sources of income. Within this industry, collectors, in turn, can acquire small portions of valuable works, diversifying their portfolio and accessing a previously inaccessible market. As we can see, tokenization can give rise to a model that democratizes access to art or real estate, creating new opportunities for everyone.

Additionally, tokenization is also revolutionizing the management of supply chainsBy tokenizing goods transported throughout the supply chain, their origin, location, and condition can be tracked in real time, improving efficiency, transparency, and traceability. In this sense, tokenization reduces the risk of fraud, counterfeiting, and theft, helping companies optimize their operations and reduce costs.

Another sector with great potential for tokenization is the EnergyTokenization of energy assets, such as solar panels or wind turbines, allows investors to participate in renewable energy projects and earn returns in the form of tokens.

But, in addition to the examples mentioned, tokenization is also finding applications in other sectors such as The music, video games, sports and philanthropy, where charities can raise funds more transparently and efficiently, reaching a wider audience.

Dual adoption as a key factor in the exponential growth of tokenization

According to the Ripple and BCG report, a crucial concept to understand the growth of tokenization is the "dual adoption" or "twin flywheels«This concept refers to the synergistic interaction between companies that improve their products and services on the blockchain and the consumers who purchase those products, which in turn attracts more consumers and fosters greater institutional interest in tokenization.

"A flywheel effect is driving adoption, where institutional supply and investor demand reinforce each other.", reads the report.

To better understand this concept, we can compare the adoption of tokenization to the growth of social media. As more users joined platforms like Facebook and X, these platforms became more valuable to companies looking to reach a wider audience. This incentivized companies to invest in advertising and marketing on these platforms, which in turn attracted even more users. Similarly, the dual adoption in tokenization creates a virtuous circle where the participation of companies and consumers reinforce each other.

In other words, as companies offer more attractive and user-friendly tokenized solutions, more consumers adopt them. This increased adoption will incentivize more companies to develop tokenized solutions and attract more institutional investors seeking growth opportunities. This network effect is a key factor in the exponential growth of the tokenized asset market over the next decade.

However, for this dual adoption to take hold, it's critical to address certain challenges, such as interoperability between different blockchains, smart contract security, scalability, and education. As these obstacles are overcome, tokenization will be better positioned to reach its full potential and transform the world of finance and beyond.

Investing in cryptoassets is not fully regulated, may not be suitable for retail investors due to high volatility and there is a risk of losing all invested amounts.