The Crypto Industry Enters Stock Trading: RWA is the Magic Word
The lines between the crypto industry and traditional finance are steadily blurring. Real-World Assets (RWA) exemplify this and are exclusively expanding on blockchains. Major growth rates suggest a new megatrend.
The term RWA stands for Real-World Assets in crypto jargon and is a driver rarely discussed in public. However, Real-World Assets are on a remarkable growth curve within the crypto industry. RWA describes tokenized financial products from the real world, bringing them into the digital realm of blockchains and cryptocurrencies. Companies like BlackRock with its innovative bond fund, Franklin Templeton, and Ray Dalio have already entered the RWA space. These investments do not just contribute experience from capital markets but also significant amounts of capital.
How Real-World Assets Work on Blockchains
The allure of RWA is primarily due to smart contracts and their transparent, legally binding form. Blockchain technology enables the representation of real-world financial instruments such as stocks, bonds, and possibly other derivatives as tokens. This can result in dramatic efficiency gains, cost savings, and extended trading options in 24/7 mode.
The specialist consultancy firm K33 has recently taken an in-depth look at RWA in the crypto sphere. According to their analysis, the total volume of Real-World Assets on blockchains has grown significantly to hit about 3 billion US dollars at the end of 2023. The forecast suggests this could be just the beginning: in the coming decades, an economic turnover of up to 100 trillion US dollars could be reached through Real-World Assets.
Ethereum and Altcoins as Foundations for RWA
According to K33 analysts, one driver behind these impressive numbers is the Ethereum ecosystem. Ethereum alone accounts for 60 percent of the RWA on blockchains. Here, FinTechs and established financial services are flocking in waves, recognizing that RWA on Ethereum promises potentially sustainable revenues and competitive advantages.
Nonetheless, as an investor, one should not blindly invest in the RWA market to ride the trend. Since concrete regulations and frameworks for RWA on blockchains are still often lacking, the risk of insolvency or bankruptcy of the crypto active operators remains high. Intensive research into the market can help investors identify promising RWA companies.
Essentially, RWA is evidence that the crypto industry and traditional financial markets are increasingly merging. Hence, the digital transformation of financial markets will be further accelerated by RWA. Whether the decade of Real-World Assets will indeed come to fruition remains to be seen, yet it is clear that this trend is already being actively exploited by businesses.
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