Ilya Volkov, for FORBES: How Tokenization is the New Rails of Finance

Ilya Volkov, CEO of YouHodler, for FORBES: Bridging Two Worlds - How Tokenization is the New Rails of Finance

A trillion Dollar Tokenization Market Could Unlock the Potentials of Finance 

"The buzzword is RWAs, or real-world assets,” says Ilya Volkov in his recent Forbes article. “It seems like everyone, from startups to sovereign banks, is discussing the tokenization of real estate, equities, invoices, and income streams." 
‍

This is fast becoming a reality, with many financial organizations, such as Nasdaq, embracing tokenization, which will open up more opportunities for the adoption of digitalized assets with real-world utility.  

Events surrounding the tokenization of assets could lead to the next era of finance, giving many the opportunity to witness decentralization through blockchain applications rather than companies and organizations having full control of their operations. 

Despite the emergence of this new financial technology, we see the future of finance becoming tokenized, with numerous opportunities opening up, including asset management, investments, and, above all, asset ownership. 

There is a need for companies and startups to design with a focus on human impact, regulatory compliance, and creating lasting impressions for many.  

Sustaining Accessibility, Efficiency, and Mobility through On-chain Tokenization

Tokenization is the process of issuing digital, unique representations of real-world assets, such as art, real estate, equities, and bonds, with data security through the use of blockchain technologies.

The core purpose of tokenization is to enable the on-ramping of real-world assets onto the blockchain, which decentralized finance (DeFi) has struggled to bridge for decades, as traditional finance (TradFi) continues to coexist in silos.
‍
However, tokenization being adopted by many organizations could open up several opportunities that never existed with the help of blockchain technologies, allowing companies and institutions to achieve the following:

• Programmability - Tokenization enables code to be embedded in real-world assets and engage with smart contracts to a higher degree than currently seen on the blockchain, allowing for better automation and flexibility.

• Efficiency of Operation - With the help of smart contracts and blockchain, tokenized assets will have streamlined processes and automated transactions, making blockchain-based automation look effortless. 

• Fast Transaction Settlement - The emergence of tokenization, which allows traditional finance and other institutions to adopt this new technology, will enable instant transaction settlement on the blockchain, eliminating the need to wait 2-3 business days. All transactions will be processed and recorded on the blockchain ledger. 

There has been hype surrounding tokenization for years now, despite predictions from institutional organisations such as BlackRock and JPMorgan, who believe the future of finance is tilting that way. 
‍

However, the move towards tokenization is gaining more recognition, following Nasdaq's filing for the tokenization of real-world assets. Overall, tokenization of real-world assets will build trust, improve efficiency, liquidity, compliance, and accessibility.  
‍

Tokenization is gaining the needed recognition. What would happen to decentralized finance and traditional finance in the coming months to years?

Hybrid Finance to Dominate the Financial Space

The two old financial spheres that have existed and created strong debate regarding the relevance of traditional finance (TradFi) and decentralized finance (DeFi) are being replaced by tokenization, which is gaining increasing trust in recent months.
‍

Institutions and startups are experimenting on blockchain rails, embracing regulatory change and new technologies that bring more efficiency and practicality. Platforms would be looking for scalability and providing seamless services at the earliest times across the financial world.   
‍

The tokenization industry could also help resolve the compliance issues that have plagued the DeFi industry for years, as this clear resolution in the financial space could lead to transparent, resilient, and compliant design. Platforms will aim for scalability and longevity, keeping their users at the forefront of their services from the very start. 

Designing for Impact With Users at the Core

According to Ilya Volkov, every white paper and pitch deck for different projects lacked the human impact, which makes many web3 projects redundant, less efficient, and excludes many people. 
‍

Ilya Volkov speculates the following: “In the next 12 to 18 months, I predict the breakout companies won’t be the flashiest. They’ll be the ones quietly solving for trust, access, and empowerment, such as wallets that become bank replacements in frontier markets, yield models based on real-world labor and productivity, and AI-powered financial coaches trained on spending, not clicks.”
‍

An example can be seen with YouHodler; this is more than a platform; this is a Swiss-based fintech designed to bridge the gap between traditional finance and the blockchain industry, providing seamless fiat-crypto services across 100 countries while also allowing users to explore the tokenized real-world assets. 
‍

With companies solving problems, building trust, and enhancing productivity, unicorns will emerge because they provide a bridge of solutions and earn loyalty by surviving the hype around the Web3 space. 
‍

Another key reason for the survival of companies would be dependent on proving blockchain technologies work and matter through usable products and services to those in third-world countries, delivering value and impact to moms in Lagos, drivers in Manila, freelancers in São Paulo, by creating products and services that solve real-life problems through designs and on-chain technologies.