Ripple’s Vision for Tokenization; What It Means for Crypto

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Ripple's Vision for Tokenization; What It Means for Crypto
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In a three-part Insights series, Rip­ple unveils the big vision of tok­eniza­tion. It said that 72% of the more than 1,700 finance lead­ers who par­tic­i­pat­ed in Rip­ple’s recent glob­al sur­vey expect to explore tok­eniza­tion with­in the next three years, cement­ing the tech­nol­o­gy’s posi­tion as a cor­ner­stone of innovation.

The increased inter­est in and use of tok­eniza­tion may be traced back to the numer­ous advan­tages that blockchain tech­nol­o­gy provides.

Tok­eniza­tion is pro­ject­ed to assist busi­ness­es in max­i­miz­ing income through eas­i­er man­age­ment, increased acces­si­bil­i­ty and more liq­uid­i­ty, rang­ing from finan­cial assets and real estate to own­er­ship, event tick­et­ing and car­bon credits.

Tok­eniza­tion can also increase access to an asset class by low­er­ing tra­di­tion­al entry hur­dles, cut­ting costs or asset prices, and remov­ing geo­graph­i­cal limitations.

Com­pa­nies can also ben­e­fit from the oper­a­tional ben­e­fits pro­vid­ed by tok­enized assets on the blockchain, such as speed­i­er trans­ac­tions, low­er man­age­ment fees and reduced costs.

Rip­ple uses the XRP Ledger (XRPL) as an exam­ple — a decen­tral­ized pub­lic blockchain designed specif­i­cal­ly for finan­cial use cas­es that has allowed over 2.6 bil­lion trans­ac­tions to set­tle in real-time for more than a decade.

Accord­ing to Rip­ple, the ben­e­fits of tok­eniza­tion can only come to fruition when the mar­kets for tok­enized assets become more liq­uid and have a strong sec­ondary market.

Rip­ple is already set­ting foot in the tok­eniza­tion world through its part­ner firms. For instance, Rip­ple part­ner Thal­lo tok­enizes car­bon cred­its, so data is moved, man­aged and record­ed on the blockchain.

In Novem­ber 2023, HSBC announced that the com­pa­ny will work with Rip­ple-owned Meta­co to devel­op a dig­i­tal asset cus­tody ser­vice for insti­tu­tion­al clients who plan to invest in tok­enized secu­ri­ties or tok­enized gold.

In 2024, Rip­ple CTO David Schwartz pre­dicts real-world asset (RWA) tok­eniza­tion will dri­ve the blockchain econ­o­my, with real estate and com­modi­ties tak­ing the lead. He pre­dicts that tok­enized RWAs on the XRP Ledger will enhance col­lat­er­al­ized loans, improve inter­op­er­abil­i­ty, attract insti­tu­tion­al adop­tion and reshape the finan­cial sector.

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