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Blockchain tokenization
The digital world is changing at a pace you can imagine. Innovative technology use cases are showing up every day. The Blockchain tree is also expanding its branches where one branch which is known as tokenization is spreading really fast in the economy, whether it’s real-world asset tokenization or the finance industry.
A recent research by Binance has shown the on-chain market of RWA has exceeded a mind-blowing digit of 12 billion dollars! This clearly states that investors are getting more interested in this. In fact, the Boston Consulting Group (BCG) also predicted an impressive $16 trillion growth of the tokenized asset market by the year 2030.
In this blog, we are sharing insights about RWA and how it will benefit the industry, investors, and its users.
What is tokenization?
Tokenization is the new trend in finance and blockchain. Tokenization can simply be defined as a process of monetizing the value of RWAs into digital tokens, which will then be purchased, sold, or traded on the blockchain. It is picking up because it allows quite an easy entry into assets that were once not easy to reach or access, be it real estate, art, or even commodities like gold. Real-world assets can be anything valuable that has a physical or tangible presence, such as property, cars, or precious metals.
With Tokenization, you can split it into smaller, digital pieces, which can be easily bought by whoever wants to own a portion of something valuable with a huge amount, rather than buying the whole thing. This opens up new investment options for a much broader audience.
What is blockchain’s role here?
Blockchain makes the trading of tokens easy, transparent, and secure. Blockchain makes the data available to the public which results in boosting trust in the system. Due to its decentralized nature blockchain, it minimizes the reliance on some specific people. This ecosystem enables a safe and efficient transfer of ownership of tokenized assets using digital wallets between two individuals without worrying about their location or identity.
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Tokenization in the Electric Market
Electric vehicle marketing has been growing at an unprecedented speed for the past few years with the number of electric cars on the road growing from 5 years ago to over 40 million in 2023. BloombergNEF also predicted that by 2027 the passenger EV sales are going to exceed 30 million. This clearly states this sector is going to grow in the future. The Electric vehicle market is also adopting innovative technologies like RWA tokenization, IoT, and Blockchain to address the challenges and issues posed by EV owners.
Young EV buyers are interested in buying vehicles that are also sustainable or promote eco-friendliness. As the consumer base shifts over time, customer expectations for EVs will also evolve and manufacturers should be prepared to meet them. Tokenization and blockchain can be used to implement power-saving techniques and useful sustainable practices in this domain.
There are some issues EV owners face which primarily include battery range, costs, and charging infrastructure. Let’s understand it in more detail-
There are many complexities in existing EV charging infrastructure and among them, the major issues are the lack of well-established and accessible charging infrastructure. While Tesla, ChargePoint, and other EV companies are installing charging infrastructure, the required pace is not being met due to burdensome requirements for setting up charging infrastructure which is making it hard for new consumers to switch to electric cars.
The current revolution around electric vehicles is already gaining momentum but one big issue is yet to be solved – the investment funding gap for robust charging infrastructure. The lack of charging infrastructure is preventing EV’s wider adoption and thus limiting the market growth potentially.
Users need to have sufficient charging infrastructure so they can confidently switch to EVs. This is particularly true for those who live in apartments or rely on street parking, as they cannot readily install a charger at home. A recent study revealed that 42% of European EV owners in cities don’t have access to home charging points. This challenge isn’t an exception to Europe; the situation persists almost everywhere. It highlights the urgent need for an equitable rollout of public charging infrastructure and ensuring that sufficient charging stations are available in all neighborhoods, not just limited to private garages.
Key Use Cases of RWA Tokenization
- Plugmate – Plugmate is a community-owned, Blockchain-powered crowdfunding platform for electric vehicle (EV) charging infrastructure development with accessibility at its core. It allows everyone to buy tokens and allow them to invest in charging station infrastructure via a transparent and secure decentralized fundraising model, solving the traditional infrastructure funding issue. Plugmate empowers community-driven growth by enabling local communities to take control of their EV charging needs. It also promotes local stakeholders to become active participants in building the required charging network.
- Digix – Digix introduced an innovative way of tokenization of gold with Digix Gold Token (DGX) where each token represents one gram of Digix gold. By enabling fractional ownership of actual gold and the opportunity to exchange tokens backed by gold on blockchain platforms this made it easier for investors to enter the gold market. This invention has revolutionized the way that commodities such as precious metals are invested.
- Maecenas – Maecenas’ art tokenization use revolutionized the high-end art market. Maecenas made it possible for smaller investors to purchase a portion of expensive artwork by tokenizing famous pieces like Andy Warhol’s 14 Small Electric Chairs. It has enabled increased market liquidity which opened this market for trading and buying of rare collectibles to a wider range of people that were previously only accessible to affluent buyers.
Benefits of Tokenization in the EV Industry
Tokenization offers many benefits in the EV industry which are Renewable energy-powered EV charging stations can track and exchange RECs using tokens. As a result, investors and consumers can accrue tokens based on how much clean energy they use or preserve. The purpose of it is to encourage more people to use renewable energy sources to charge their electric cars. Token systems can help collect crucial charging data by producing sellable tokens. This data will be useful to energy providers urban planners and other businesses opening up new revenue streams for token holders.
EV charging stations that run on renewable energy may track and trade RECs for tokens. Thus investors and users can earn tokens based on how much renewable energy they use or save. The goal is to encourage more people to use renewable energy sources to charge their electric vehicles. Token systems can be used for token creation and sale by gathering crucial charging data. For energy companies city planners and other organizations, this data might be useful and provide token holders with an extra source of income.
Conclusion
Tokenization is not just a concept anymore, in fact, it has been growing significantly in the past few years and it has been projected to be a massive growth by 2030. Tokenizing is revolutionizing multiple industries such as art, electric vehicles, gold, real estate, and finance. Blockchain tokens also offer multiple benefits whether you are an investor, trader, or buyer.
It enables art lovers and collectors to purchase a small portion of it without buying the whole artwork. Tokenization also contributes to green energy and sustainability by tokenizing Renewable Energy Certificates.