The key advantages’ stated by blockchain technology over current legacy systems include cost efficiency, greater liquidity, 24/7 market access, and the elimination of intermediaries.

According to Cynthia Wu, co-founder of digital asset service platform Matrixport, practically every “real world” asset class might be tokenized in the form of a nonfungible token (NFT) within the next five to ten years.

According to Wu, the optimal case for NFTs would be ubiquitous representation of real-world assets to be kept and sold on-chain:

“Eventually, all the major financial asset classes are going to be represented on this new financial infrastructure, and NFTs could be our instrument to represent off-chain assets like real estate deeds, equities, or bonds.”

Wu said the transfer on-chain would make these real-world assets “more liquid and marketable,” improving price discovery and transaction activity.

However, Wu stated that, while it is great that we have created over two trillion dollars in 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 helped institutional adoption:

“We haven’t really been seeing off-chain assets being represented on-chain. we’re now really only at the first 3-5% of it. “

Nonetheless, Wu is optimistic that the tide will shift.

A research released earlier this month by Boston Consulting Group (BCG) anticipated that the entire value of tokenized illiquid assets will reach $16.1 trillion by 2030.

BCG estimated that pre-initial public offering (IPO) equities, real estate, private loans, and revenue generated by small to medium-sized firms will account for the majority of this tokenization.

While the tokenization of real-world assets has sparked the curiosity of financial institutions, Wu claims that some are hesitant to abandon old systems that have served them well over the years.

Wu pointed out that the existing financial system hasn’t accounted for the trade of nonfungible assets because they can’t be swapped as readily as fungible or divisible assets, but tokenization on the blockchain gives a solution.

She also suggested that blockchain infrastructure is preferable to older systems, citing cost reductions, improved liquidity, 24/7 market access, and the elimination of middlemen as key elements leading to a more streamlined financial system.