November 17 2025
Cryptocurrencies and blockchains have long held the promise of revolutionizing the financial world, but so far digital assets have been characterized primarily by extreme volatilityTo address this risk, developers are turning to the physical world by tokenizing assets like gold, oil, and real estate. This gives digital currencies a solid foundation and lasting value. In this article, I’ll dive deeper into the tokenization of real-world assets and what it means for the blockchain industry.
Before a physical asset can serve as collateral for a digital asset, it must first be tokenized. Tokenization is the process of creating a digital representation, or token, of an asset on the blockchain. This allows us to control ownership and transactions electronically and transparently.
The process of tokenizing a real asset can vary based on the protocol used, but generally it follows a similar pattern. Let’s explore how you would tokenize a painting:
Tokenization opens the door to global access to previously limited financial product offerings and enables illiquid assets to be used as collateral. For example, tokenized real estate allows users to purchase fractional ownership of homes and buildings. Commodities like gold and oil can be traded as blockchain-backed tokens, while on-chain lending with RWA collateral is becoming increasingly common. Even physical assets like art and rare collectibles are being tokenized for digital fractional ownership.
Sam Mudie, CEO and co-founder of UK-based tokenization company Savea, believes that the tokenization of RWAs bridges the worlds of traditional and decentralized finance. It increases accessibility, operational efficiency and liquidity, and offers opportunities in currently inefficient markets.
Several projects are already tokenizing real-world assets, with over $10 billion worth of RWAs locked on decentralized platforms. Cryptocurrencies like PAX Gold and RealT offer unique opportunities to tokenize physical assets. Companies like Avalanche and Centrifuge are pioneers in this space, leading to a combined market cap of around $37 billion for RWAs.
Before tokenization can become mainstream, there is a need for clear regulation of stablecoins, especially in the US. The blockchain ecosystem needs to be recognized as the legal repository for tokenized assets. Legal ownership, licensing requirements, and anti-money laundering compliance are some of the challenges that need to be overcome. There is often a gap between local legislation and global token trading, adding to the complexity.
It should come as no surprise that matching supply and demand in this space is a real challenge. It doesn’t make sense to tokenize assets without demand. The focus should be on tokenizing products that people actually care about.
As technology continues to bridge the gap between the physical and digital worlds, tokenized RWAs are poised to reshape how we invest and interact with real-world assets. It’s been predicted that this space could grow to $2025 billion in value by the end of 50. Tokenization isn’t a replacement for traditional financial ecosystems, it’s a complement to them. It’s simply the next step in the evolution of age-old assets.
What are Real Assets (RWAs)?
Real-world assets are physical or tangible goods such as real estate, commodities, and art, which can now be tokenized for digital ownership and trading.
Why is tokenization important for the blockchain?
Tokenization makes traditional, illiquid assets more accessible to a wider audience and offers new opportunities for investing and trading.
What are the biggest challenges facing tokenization today?
The biggest challenges are regulation, legal ownership, and the need for compliance with anti-money laundering laws, as well as bridging the gap between local and global trade laws.
Bitcoin (BTC)
Ethereum (ETH)
XRP (XRP)
