Cynthia Wu, co-founder of digital asset service platform Matrixport, says that in five to ten years, almost every “real world” asset class could be tokenized as a nonfungible token (NFT).
Wu told Asian trade that the best case for NFTs would be for them to be widely used to store and trade real-world assets:
“Eventually, all of the major financial asset classes will be represented on this new financial infrastructure, and NFTs could be used to represent off-chain assets like real estate deeds, stocks, or bonds.”
Wu said that putting these real-world assets on the blockchain would make them “more liquid and more tradeable,” which would help people find better prices and do more business.
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But Wu said that while it’s great that we’ve created over $2 trillion worth of digital native assets on-chain from Bitcoin (BTC), Ethereum (ETH), and other tokens, the only niche that has generated NFT transaction activity has been digital collectibles, which hasn’t really helped institutional adoption:
“We haven’t seen much off-chain asset representation on-chain. […] We’re only at the first 3–5% right now.”
But Wu is still sure that things will get better.
In a report from earlier this month, Boston Consulting Group (BCG) said that tokenized illiquid assets would be worth $16.1 trillion by 2030.
BCG thought that a lot of this tokenization would come from stocks before they went public, real estate, private debt, and money made by small and medium-sized businesses.
But even though the tokenization of real-world assets has gotten the attention of financial institutions, Wu says that some have been hesitant to move away from the old systems that have worked well for them.
Wu said that the traditional financial system hasn’t thought about trading nonfungible assets because they can’t be traded as easily as fungible or divisible assets. However, tokenization on the blockchain solves this problem.
She also said that blockchain infrastructure is better than legacy systems because it saves money, makes markets more liquid, gives people access to them 24/7, and gets rid of middlemen. All of these things would make the financial system run more smoothly.
Cynthia Wu was a co-founder of MatrixPort.
Related: The $491 billion health care fund managed by KKR was tokenized on Avalanche.
Matrixport was started in February 2019, and it currently manages digital assets worth between $3 and $4 billion for a wide range of retail and institutional clients.