The tokenisation of real-world assets (RWAs) is reshaping the investment landscape, making once-unapproachable markets much more accessible. This digital transformation uses blockchain technology to convert physical or tangible assets like real estate, art, and commodities into digital tokens, making it easier to trade, fractionalise, and manage ownership.
Consider an example of investing in a public company where you don’t need to own the entire business to benefit from its success, as buying shares represents purchasing a small portion of the company’s value.
Tokenisation works in a similar way for real-world assets. Instead of purchasing the entire asset, you buy digital tokens that represent fractional ownership. Just as shareholders gain dividends or profits, token holders benefit from the asset’s value appreciation or revenue, making investing more accessible and inclusive.
What is Tokenisation?
Tokenisation refers to the process of converting ownership rights of an asset into digital tokens on a blockchain. These tokens are then traded or held, offering a form of fractional ownership of assets like property, artwork, precious metals, luxury goods, land, or even forests. Some platforms will even allow you to earn interest on holding these assets.
Blockchain technology ensures the security and transparency of tokenised assets, giving investors confidence in their ownership. Rather than needing vast amounts of capital to invest in a whole asset, individuals can own a portion of an asset by purchasing tokens representing fractions of those assets.
This model of fractional, on-chain ownership is gaining traction across institutional and environmental markets alike. Hedera is being used to underpin real-world asset tokenisation in sectors ranging from precious metals to ecological credits, offering the performance and security needed for scalable enterprise adoption.
Through its public ledger and governing council, Hedera enables organisations to issue verifiable tokens tied to real assets—such as gold, real estate, or carbon credits—while ensuring compliance and auditability. This is already being demonstrated by companies like RECDEFi, which use Hedera to tokenise verified renewable energy certificates, allowing them to be tracked and traded with full transparency.
Key Benefits of Tokenising RWA’s
Liquidity: Traditional assets like real estate or fine art are often illiquid, meaning they cannot be quickly converted into cash without losing value. Tokenisation, however, allows for the fractionalisation of assets, creating new liquidity options. Investors can trade or sell tokens representing portions of these assets, often with the ease of digital transactions. This brings enhanced flexibility to markets previously limited to wealthy, institutional investors.
Fractional Ownership: Tokenisation breaks down high-value assets into smaller, tradable units. For instance, instead of needing millions of dollars to buy a property, an investor can purchase a fraction of a property for a much smaller sum. This opens the door for a broader group of investors, allowing them to diversify their portfolios across different asset classes and geographical regions.
Global Accessibility: Blockchain’s decentralised nature removes the geographical boundaries that traditionally limit investment opportunities. Whether an investor is based in New York or Nairobi, they can easily access tokenised assets from anywhere in the world, bypassing traditional banking infrastructure and the need for intermediaries. This allows investors to tap into markets and asset classes previously out of their reach.
Transparency and Security: One of the most compelling features of tokenisation is the transparency provided by blockchain technology. Every transaction involving tokenised assets is recorded on a secure, immutable ledger. This ensures that ownership and transaction history are clear and accessible, reducing the risk of fraud and promoting trust in the system. Blockchain also offers enhanced security features, including encryption and smart contract automation, which ensures asset ownership can be authenticated and verified.
Cost Reduction: Traditional investment models often require brokers, custodians, and other intermediaries, all of whom charge fees. By cutting out these middlemen, tokenisation reduces the overall cost of transacting, allowing for more efficient and cost-effective trading. Investors also benefit from faster transaction times, as blockchain networks facilitate near-instant settlement of trades.
How RWA’s are Transforming Traditional Finance
The tokenisation of real-world assets is poised to revolutionise financial markets, with McKinsey forecasting that the tokenised market could reach a valuation of $2 trillion by 2030—excluding cryptocurrencies and stablecoins. Adoption is expected to be fastest in asset classes such as cash and deposits, bonds, exchange-traded notes, mutual funds, and securitised loans, where blockchain technology can enhance liquidity, transparency, and efficiency.
Industry leaders are already recognising this shift, with BlackRock CEO Larry Fink stating in early 2024 that “the next step going forward will be the tokenisation of financial assets,” envisioning a future where stocks and bonds exist on a unified blockchain ledger. This transformation promises to reduce settlement times, increase accessibility, and reshape how institutions manage and trade assets.
As this vision becomes reality, infrastructure providers capable of meeting institutional demands are playing a central role. Hedera, with its high throughput and low-cost architecture, has emerged as a leading platform for RWA tokenisation.
For example, Archax—a UK-regulated digital asset exchange—is leveraging Hedera to issue and manage tokenised traditional financial instruments on-chain, enabling fully compliant, high-efficiency trading environments.
How RWAs are Unlocking the True Potential of Decentralised Finance
The tokenisation of RWAs is set to transform decentralised finance (DeFi) by introducing tangible value and stability to a market traditionally driven by cryptocurrencies. By bringing assets with intrinsic worth onto the blockchain, DeFi can offer more secure and predictable lending, borrowing, and yield-generating opportunities. Unlike volatile cryptocurrency-backed loans, RWA-backed lending provides greater security, making DeFi more appealing to institutional investors.
However, ensuring trust in off-chain asset verification and regulatory compliance will be crucial to unlocking the full potential of RWAs in DeFi. If these challenges are met, RWAs could bridge the gap between traditional and decentralised finance, paving the way for a more stable and scalable DeFi ecosystem.
What is the difference between a token and a NFT?
A frequently asked question is whether NFTs and tokens are the same thing. Tokens and NFTs (non-fungible tokens) share similarities but are fundamentally different concepts. Tokenisation is the process of converting real-world or digital assets into blockchain-based tokens, which can represent anything from real estate and equities to intellectual property and digital rights. These tokens can be either fungible (interchangeable, like cryptocurrencies) or non-fungible (unique and distinguishable).
NFTs are a subset of tokens that specifically represent non-fungible assets, meaning each NFT is distinct and cannot be exchanged on a one-to-one basis like a fungible token. While all NFTs are tokenised assets, not all tokenised assets are NFTs.
Case Studies of Tokenisation in Action
Tokenisation is rapidly moving beyond theory into practice, with diverse sectors adopting blockchain to digitise ownership and improve access to traditionally illiquid assets. From real estate and fine art to music royalties and agriculture, blockchain-based tokenisation opens new investment pathways, reshaping how value is exchanged.
The following case studies illustrate how this technology is deployed across industries, demonstrating its growing impact on the global economy.
1. Real Estate Tokenisation: Unlocking Fractional Ownership
Tokenising real estate is revolutionising property investment by allowing fractional ownership of residential and commercial properties. Through blockchain technology, investors can purchase digital tokens representing a share of a property, making real estate investment more accessible and liquid.
Platforms like RedSwan, RealT, and Brickblock enable individuals to buy, sell, and trade real estate-backed tokens. By removing the barriers of traditional property investment, such as high capital requirements and lengthy legal processes, real estate tokenisation is democratising access to the property market.
The largest real estate tokenisation deal to date is the $4 billion portfolio tokenised by RedSwan CRE using Hedera's Token Service to mint and manage the tokens, allowing for a seamless and secure representation of real estate assets on the Hedera network. Announced in September 2023, this initiative involves 36 mixed-use properties across the Middle East Gulf States, encompassing office spaces, multi-family units, retail spaces, industrial properties, and prime development sites.
The tokenisation enables a digital cap table and global investor access, representing a significant milestone in blockchain-based real-world asset tokenisation.
2. Art Tokenisation: Bringing Fine Art to the Blockchain
Art tokenisation is reshaping how people invest in high-value artworks, enabling fractional ownership of pieces that were previously reserved for elite collectors. By converting art into digital tokens, investors can purchase shares in works by renowned artists and trade them on blockchain-based marketplaces.
Companies like Maecenas and Masterworks have pioneered this space, offering access to blue-chip artworks by artists such as Picasso and Banksy.
In 2021, Injective Protocol purchased Banksy's 2006 screenprint "Morons (White)" for approximately $95,000. They then burned the physical artwork and minted a non-fungible token (NFT) representing it, which sold for about $380,000. This act was intended as a statement on the nature of art and ownership in the digital age.
This event sparked discussions about the value and permanence of digital art, as well as the implications of destroying physical artworks in favour of their digital counterparts.
3. Commodity Tokenisation: The Case of Precious Materials
The tokenisation of precious materials is transforming how investors buy, sell, and hold assets like gold, silver, and diamonds. By linking digital tokens to physical reserves stored in insured vaults, this approach enables fractional ownership and seamless transactions, bringing liquidity to traditionally static assets.
Several companies, including Diamond Standard, Kinesis Money, Paxos Gold (PAXG), and Tether Gold (XAUT), have developed platforms that allow users to own and trade tokenised precious materials. Each digital unit is typically backed by a specific amount—such as 1 gram of gold or 1 ounce of silver—ensuring that the tokens maintain intrinsic value.
Beyond simple ownership, tokenised precious materials can be used for payments, trading, and even yield-generation models, where transaction fees are redistributed among holders. This innovation is making precious materials more accessible, secure, and versatile for investors around the world.
4. Music Royalties Tokenisation: A New Era for Artists and Fans
Tokenising music royalties is changing the music industry by allowing artists to raise capital while giving fans and investors a share in their favourite songs. Through blockchain-based royalty distribution, token holders receive a portion of the revenue generated from streams, sales, and licensing deals.
Platforms like Royal and AnotherBlock have pioneered this approach, enabling musicians to sell fractional ownership of their songs. This not only provides artists with upfront funding but also strengthens fan engagement by allowing supporters to benefit financially from an artist’s success.
5. Wine Tokenisation: Digitising Fine Wine Investments
Fine wine has long been a sought-after investment, but tokenisation is making it more accessible and liquid. By linking each digital token to a physical bottle or case stored in professional-grade facilities, investors can trade wine assets without the complexities of handling and storage.
Companies such as WiV Technology and Vinsent are leveraging blockchain to create marketplaces for tokenised wine investments. These platforms provide provenance tracking, ensuring authenticity while enabling global investors to participate in the fine wine market with ease.
6. Livestock Tokenisation: Digital Ownership in Agriculture
Livestock tokenisation is bringing blockchain innovation to the agricultural sector by enabling investors to own fractional shares in cattle and other farm assets. This model helps farmers raise capital while providing investors with exposure to agricultural returns.
Projects like AgriChain and BeefLedger allow individuals to buy digital tokens representing livestock, with the potential for returns based on market prices and farming yields. By enhancing transparency and efficiency, livestock tokenisation is modernising agricultural investment while ensuring fairer access to funding for farmers.
7. Carbon Credit Tokenisation: Enhancing Transparency in Environmental Markets
Blockchain technology is impacting environmental markets, aiming to improve the transparency and efficiency of carbon credit systems. For example, platforms like TYMLEZ and DOVU are leveraging Hedera's distributed ledger to tokenise carbon credits, ensuring tamper-proof accounting of emissions and credits across supply chains.
TYMLEZ, an Australian sustainability solutions provider, has integrated its platform with DOVU's carbon credit system, enabling customers to purchase fully verified carbon credits directly. This partnership allows companies to offset their carbon emissions more efficiently, with reductions tied to verified emission sources. The integration utilises the Hedera network to provide end-to-end visibility of the carbon credit value.
DOVU employs the Hedera Token Service to issue tokenised carbon credits, facilitating a decentralised marketplace for carbon offsetting. This approach ensures that project managers and landowners can update buyers about the status of their land or projects in a trusted manner, enhancing the credibility of carbon offset initiatives.
Challenges in Real-World Asset Tokenisation
While real-world asset (RWA) tokenisation presents significant opportunities, several challenges must be addressed for widespread adoption. Regulatory uncertainty remains a major hurdle, as different jurisdictions have varying approaches to the legal classification and compliance requirements of tokenised assets. Additionally, issues around interoperability between blockchain networks and existing financial systems create barriers to seamless integration.
Market liquidity is another concern, as tokenised assets may struggle to attract sufficient buyers and sellers without established secondary markets. Furthermore, technological risks, such as smart contract vulnerabilities and the need for robust security measures, add complexity to large-scale implementation. Overcoming these challenges will require collaboration between regulators, financial institutions, and technology providers to build a secure, transparent, and efficient tokenisation ecosystem.
While numerous platforms facilitate RWA tokenisation, only a select few have demonstrated the scalability, security, and regulatory compliance necessary to support large-scale, institutional-grade tokenisation projects. These platforms employ advanced consensus mechanisms and robust governance models to ensure transaction integrity and meet the stringent requirements of financial institutions.
Hedera stands out as one such example, using its energy-efficient hashgraph consensus and enterprise-grade governance model to power a wide range of tokenisation projects—from real estate to ESG applications. Its low-carbon infrastructure has enabled use cases such as the tokenisation of carbon credits and environmental assets, demonstrating how a platform can combine innovation with sustainability.
With the tokenisation of real estate, art, and commodities already in full swing, and emerging markets like carbon credits and DeFi integration on the horizon, the future of investing is set to become more inclusive, global, and dynamic than ever before.
Want to learn more about tokens? Read about tokenomic design here.
Disclaimer:
The content provided in this article is for informational purposes only and should not be considered as financial or investment advice. We do not endorse, promote, or recommend any of the companies or projects mentioned. Readers are encouraged to conduct their own research and seek professional advice before making any investment decisions.
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