Over the last couple [months](https://inleo.io/@leoglossary/leoglossary-month), the discussion surrounding the [tokenization](https://inleo.io/@leoglossary/leoglossary-tokenization) of real [world](https://inleo.io/@leoglossary/leoglossary-world) [assets](https://inleo.io/@leoglossary/leoglossary-asset) (RWA) has accelerated.  This is something that has led to even higher forecasts in [market capitalization](https://inleo.io/@leoglossary/leoglossary-market-capitalization) for [cryptocurrency](https://inleo.io/@leoglossary/cryptocurrency).  This only makes sense as we see some big numbers start to roll in.


By now, everyone involved in crypt heard of [Bitcoin](https://inleo.io/@leoglossary/leoglossary-bitcoin) [ETFs](https://inleo.io/@leoglossary/leoglossary-exchange-traded-fund-etf) (based upon spot pricing).  That sent off a wave of [funds](https://inleo.io/@leoglossary/leoglossary-fund) flowing in.  At present there is [roughly $50 billion in these ETFs](https://www.tradingview.com/markets/etfs/funds-bitcoin/).  If we back out Grayscale's $15B, which they had as a trust, we are looking at roughly $35 billion.  


This is a healthy sum.


Naturally, this does not figure into [market](https://inleo.io/@leoglossary/leoglossary-market) cap since units in an ETF is not crypto.  None of this is tokenized.  The benefit is the need to [buy](https://inleo.io/@leoglossary/leoglossary-buy) more [BTC](https://inleo.io/@leoglossary/leoglossary-btc) (and soon Ethereum) as these funds get larger.


That said, this is a drop in the bucket.  When we look at the [debt](https://inleo.io/@leoglossary/leoglossary-debt) market, we can see how things will change quickly.


## Tokenization of Debt


We are already starting to see the tokenization of debt.  This applies to [bonds](https://inleo.io/@leoglossary/leoglossary-bond) which are financial instruments that are sold into the market.  This is how [companies](https://inleo.io/@leoglossary/leoglossary-company-business) (and governments) meet some of their obligations.


The largest issuer of debt is the U.S [government](https://inleo.io/@leoglossary/leoglossary-government).  There is roughly [$14.0 trillion in outstanding bonds](https://www.sifma.org/resources/research/us-treasury-securities-statistics/).  


A number if institutions are starting to tokenize U.S Treasuries.  To date, there is roughly $1.6 billion.


 https://img.inleo.io/DQmbKYk4kALasuThGsbLg9GD83usYCfizHEVd7aRNRr1LVN/image.png 


[An article appears on Cointelegraph](https://cointelegraph.com/news/tokenized-us-treasuries-3-billion-2024) forecasting this number to reach $3 billion by the end of 2024.  We have to keep in mind this is mostly for institutions.


Why tokenize?


Like most things in the traditional financial arena, transactions are slow and not exactly clear.  The lack of clarity poses [risks](https://inleo.io/@leoglossary/leoglossary-risk) as there are a number of financial [intermediaries](https://inleo.io/@leoglossary/leoglossary-intermediaries-financial) involved.  When dealing with [US Treasuries](https://inleo.io/@leoglossary/leoglossary-us-treasuries), the [settlement](https://inleo.io/@leoglossary/leoglossary-settlement-financial) [time](https://inleo.io/@leoglossary/leoglossary-time) is a [day](https://inleo.io/@leoglossary/leoglossary-day) or two.


Tokenization offers immediate (near) settlement along with [transparency](https://inleo.io/@leoglossary/leoglossary-transparency).  These funds are not actually trading the Treasuries but, rather, a [token](https://inleo.io/@leoglossary/leoglossary-token) backed by them.


Hence, we see the appeal.


An institution can buy $50 million on BUIDL tokens and receive then in their [wallet](https://inleo.io/@leoglossary/leoglossary-wallet) in a few minutes.  The same is true on the [sell](https://inleo.io/@leoglossary/leoglossary-sell) side where the [money](https://inleo.io/@leoglossary/leoglossary-money) is received and the entire [transaction](https://inleo.io/@leoglossary/leoglossary-transaction) settled in moments.


This is only going to be the start.  


We are going to see the much of the market move in this direction over the next couple [years](https://inleo.io/@leoglossary/leoglossary-year).  While it is possible for companies to eventually issue tokens as a form of the bond, the system, for the moment, is not set up for this.  We are seeing how it can handle the tokenization of existing assets.


How big is this?


According to [The Fed](https://inleo.io/@leoglossary/leoglossary-federal-reserve-bank-the-fed), [the total amount of commercial paper outstanding is $125 trillion](https://www.federalreserve.gov/releases/CP/volumestats.htm).


We can see how the $1.6 billion is a drop in the bucket.


## What About Stocks?


Could the same thing happen with stocks?


While it is possible, they would likely have to be structured with a few modifications.


With debt, there is a schedule of [payments](https://inleo.io/@leoglossary/leoglossary-payment).  This is what entices [investors](https://inleo.io/@leoglossary/leoglossary-investor).  They [purchase](https://inleo.io/@leoglossary/purchase) the BUIDL token, as an example, and that provides a daily [income](https://inleo.io/@leoglossary/leoglossary-income) based upon the payouts from the Treasures (or Repo contracts).  Since these are [yield](https://inleo.io/@leoglossary/leoglossary-yield) instruments, it is rather straight forward.


Also, there is a timeline until [maturity](https://inleo.io/@leoglossary/leoglossary-maturity).  That means, even if the [price](https://inleo.io/@leoglossary/leoglossary-price) drops, it doesn't matter since the [underlying assets](https://inleo.io/@leoglossary/leoglossary-underlying-asset) are held.  Only the token is traded.


With [stocks](https://inleo.io/@leoglossary/leoglossary-stocks), things are not the same.  Even with [dividend](https://inleo.io/@leoglossary/leoglossary-dividend) stocks, it is possible for the price to go down and remain there.  This will not preclude the tokenization of stocks, just a bit different [investment](https://inleo.io/@leoglossary/leoglossary-investment).


Over time, it is possible we see entities that offer tokens instead of stocks.  Once again, we are lacking in the ability from the traditional system standpoint.  However, it is likely this is built out in the next few years.


## Non Real World Assets


[Wall Street](https://inleo.io/@leoglossary/leoglossary-wall-street) brings a lot of money.  This is why the numbers can get so large in a short period of time.


Do not be surprised to see the U.S Treasury funds that are tokenized surpass hundreds of billion in the next few years.  It will grow rather quickly as more institutions get involved in crypto.


How will this compare to the non-real world?


We are talking about hundreds of trillions of dollars in assets in the traditional system.  When we consider [art](https://inleo.io/@leoglossary/leoglossary-art), [real estate](https://inleo.io/@leoglossary/leoglossary-real-estate), intellectual property, stocks, bonds, and [commodities](https://inleo.io/@leoglossary/leoglossary-commodity), we get some really big numbers.


However, it is possible the non-real world, i.e. [digital](https://inleo.io/@leoglossary/leoglossary-digital), actually surpasses this.  Here is where the concepts many discuss come into play.


Consider for a moment the idea of the [Metaverse](https://inleo.io/@leoglossary/leoglossary-metaverse).  Leaving aside the timeline, let us just look at the path heading there.  We are certainly going to see multi-world environment created, utilizing some type of mixed reality.  What is the potential of this?


Many of the same financial structures can be put in place.  This means we will have virtual market places engaging in trillions of dollars worth of transactions.  It will be tied to [gaming](https://inleo.io/@leoglossary/leoglossary-gaming), [entertainment](https://inleo.io/@leoglossary/leoglossary-entertainment), [finance](https://inleo.io/@leoglossary/leoglossary-finance), and a host of other [industries](https://inleo.io/@leoglossary/leoglossary-industry).  


Every digital platform can evolve in such a manner, creating its own [economy](https://inleo.io/@leoglossary/leoglossary-economy).


What is the value of this?  At this time, it is impossible to guess.  Over the last 40 years, we saw the explosive growth of gaming.  That is a correlation since it saw a massive shift in the physical (board games) to the digital.  


This is why you see some, including myself, putting enormous numbers on the eventual market [capitalization](https://inleo.io/@leoglossary/leoglossary-capitalization) of crypto.  It is not necessarily a run of the existing assets.  Instead, it is going to be a continued move towards the tokenization of everything.


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