RWA Tokenization. What is it? Why should you care about it? And why does this narrative carry so much weight in the upcoming crypto cycle? Let's dive into it...
RWA Tokenization, or Real World Asset Tokenization refers to the process of converting physical or financial assets (ie real estate, art, commodities, etc.) into digital tokens on the blockchain, enabling ownership. This empowers investors by breaking down the barriers of entry providing virtually anyone with access to assets that are typically reserved for the wealthy or institutions.
Why is this so important in today's evolving digital landscape?
The democratization of investments along with capital preservation are both becoming crucial in today's society. Take issues relative to the world in today's economic environment around inflation, cash is king? Yeah okay, boomer. Save all the cash you want, but the longer it sits on the sidelines the faster it becomes devalued due to rising inflation that will never stop rising as long as the Federal Reserve can continue to print money out of thin air. Let me tell you, those money printers really do go BRRRR - if you have any doubts about this, ask Ukraine and then ask yourselves how the government was able to provide stimulus/relief payments to everyone during COVID.
The real value lies in stablecoins, at least for banks that is and you probably haven't seen or heard of this because they want to keep it out of the headlines. Imagine a currency that never fluctuates in value, an asset that is completely secure and a provides a safe haven from any catastrophic event. You'd think that's the dollar, but the reality is that's not how the world works. Why do home prices appreciate in value, are they actually becoming more valuable over time or is inflation kicking in. As time goes on and an increasing number dollars are printed out of thin air, supply increases, improving the circulation of liquidity but inherently decreases the demand and value of the dollar.
This leads us into our next segment which touches on why this narrative so important to banks? Today, Thursday April 3rd, marks liberation day for the United States... a day that will go down in history as either the biggest mistake we've ever made, by implementing widespread tariffs on almost every country including our "allies," or the smartest thing this country has ever done, courtesy of President Donald Trump. Over the last 24 hours, S&P 500 stocks have erased over $120 billion per hour for a total of a $2.9 trillion loss. This, ladies and gentlemen is what a recession looks like as investors run for the hills and sell their equity in an attempt to secure what wealth they have left. What better way for us to realize the value in stablecoins than the collapse of the US stock market, erasing millions of individuals retirement savings and forcing them back into the workforce in 1-2 days. Today the stock market was down, commodities were down, real estate was down, crypto was down, everything took it on the chin and sadly some lost everything.
This begs the question... How do we avoid this situation from ever happening in the future? I've got two words for you, crypto stablecoins. We'll dive into this concept another time for it calls for entire blog post.