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Modern Technology, Timeless Value: How the Tokenization of Real World Assets is Opening up New Horizons for Private Investors

The tokenization of real assets is attracting attention in the finance and investment worlds, with the rapid development and increasing acceptance of blockchain applications signalling a breakthrough for this innovative technology.

And not without reason: tokenization is breaking down the entry barriers to previously illiquid and hard-to-access tangible assets, such as real estate and collectibles, and opening up new investment opportunities for both institutional and private investors.

What is the Tokenization of Real World Assets (RWA)?

Tokenization is the conversion of ownership rights to tangible and intangible assets into digital tokens on a blockchain. This process encompasses a wide range of assets, including but not limited to real estate, artworks, collectibles and financial instruments such as investment funds and debt instruments. Tokenization not only allows these assets to be divided into smaller, tradable units, but also facilitates their recording and management in a more secure and transparent way. This innovative method promotes partial ownership, increases liquidity and expands access to investment opportunities.

A Market on the Rise

The market for the tokenization of RWA is set for significant expansion. According to estimates by leading institutions such as Outlier Ventures (2023) and Roland Berger (2023), the addressable market is expected to grow to at least 10 to 15 trillion USD by the end of the decade. The market for physical and alternative assets far outstrips the market for other tokenized assets–an indicator of the enormous growth opportunity.

The range of market participants has expanded considerably. Today, there is growing interest from institutional investors, including banks, hedge funds, pension funds, and asset managers. These are the key players that progress necessitates: they have the needed resources to drive the development and acceptance of the tokenization of financial assets.

Investing in Collectibles - Tokenisation Opens up Access to new Asset Class

Investing in collector's items such as art, rare luxury watches or vintage cars has long been established practice among wealthy, seasoned investors. Collectibles not only offer strong potential returns, but they have historically proven to be crisis-proof, stable investments that are particularly suitable for portfolio diversification. However, private investors face the challenge of enormous capital expenditure and the complexity of procurement, storage and sale.

Tokenization overcomes these barriers by enabling fractional ownership of small, tradable fractions. As the European market leader based in Berlin, Timeless Investments is democratising the rare collectibles market.With the help of blockchain technology, the company makes it possible to invest in fractions of artworks, fine spirits and watches among other tangible, luxury assets. Thus, allowing anyone to participate in their value development. The in-house experts at Timeless meticulously curate a selection of unique collector's items, ensuring their professional storage, expert maintenance, and profitable resale through a reliable global network. This means that private investors now have the opportunity to utilise these attractive opportunities for returns and diversify their portfolios with another strategic building block.

How Investors Benefit

While traditional investment vehicles and strategies are here to stay, tokenized assets will soon play an important role in the portfolios of institutional and private investors. By dividing an asset into smaller, tokenized units, investors can significantly reduce the risk of capital concentration, such as in a single property or work of art. At the same time, the acquisition of fractions enables a broader allocation of assets. Whether property, private equity or collectibles, each of these asset classes brings its own profile of risks and returns, allowing investors to further diversify their portfolios and tailor them to their individual risk preferences.

Author: Malte Häusler, Co-Founder und CEO Timeless Investments

Website: Timeless Investments

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