Right away, Bitcoin (CRYPTO: BTC) is by far the most valuable cryptocurrency, with a market cap of $1.2 trillion. No other cryptocurrency comes close, with Bitcoin accounting for 57% of the entire cryptocurrency market value.
However, chances are you’ve already missed out on Bitcoin’s incredible journey. So you’ll need to find another cryptocurrency that has a chance of being as lucrative as Bitcoin. That cryptocurrency might just be Chain link (CRYPTO:LINK)which is at the forefront of what could be a multi-billion dollar market opportunity.
What is asset tokenization and why should I care?
This potentially massive market opportunity is known as real-world asset (RWA) tokenization. It is the process of converting traditional financial assets into digital assets that can live on the blockchain. Once they are on the blockchain, they are much easier to trade and much more accessible to a wider audience of potential buyers. As a result, RWA tokenization offers huge benefits in terms of liquidity, transparency, and accessibility.
According to the Boston Consulting Group, this could represent a potential market of $16 trillion by 2030. Coinbase Global (NASDAQ: COIN) believes the market opportunity could actually be in the “hundreds of trillions of dollars.” As a result, a number of big names on Wall Street, including Goldman Sachs Group (NYSE: GS) And BlackRock Inc. (NYSE:BLK) — are getting involved. In fact, BlackRock CEO Larry Fink thinks asset tokenization could be even bigger than the launch of the new Bitcoin spot ETFs.
Have I piqued your interest yet? Clearly, any cryptocurrency that can slot directly into the RWA tokenization trend could become very valuable. If asset tokenization represents a $10 trillion market opportunity and Chainlink can capture even 10% of that value, that’s $1 trillion, roughly the same value as Bitcoin today.
How does Chainlink fit into the asset tokenization trend?
Long-time cryptocurrency investors will likely recognize the name Chainlink, as it was one of the cryptocurrencies that led the charge for decentralized finance (DeFi) during the previous cryptocurrency bull rally. Chainlink skyrocketed in value during the height of the DeFi run in 2020-2021, but it has since fallen out of favor with investors and is now trading nearly 80% below its all-time high from May 2021.
Chainlink founder Sergey Nazarov is convinced that tokenized assets could end up being bigger than cryptocurrencies. In short, the value of all tokenized assets will one day eclipse that of the cryptocurrency market. Tokenized assets are already bigger than DeFi, which is one of the most important value drivers in the blockchain world.
Chainlink has been increasingly vocal about how it can play a role in asset tokenization. Nazarov believes Chainlink can solve the three biggest problems holding back the widespread adoption of RWA tokenization. In theory, every problem Chainlink can solve makes it more valuable.
For example, one major problem is known as “cross-chain connectivity.” This is the challenge of moving tokenized assets between different blockchains. To solve this problem, Chainlink developed a blockchain protocol called Cross-Chain Interoperability Protocol (CCIP) and partnered with real-world financial institutions to implement it.
Risk factors
Investing in Chainlink is not for the faint of heart. Indeed, Chainlink’s performance in recent times has been absolutely abysmal. It has fallen 25% year-to-date and is now in danger of falling out of the top 20 cryptocurrencies. As noted above, it is also trading 80% below its all-time high of $52.88. If you are skeptical, you could be forgiven for thinking that Chainlink’s embrace of asset tokenization is a desperate attempt to remain relevant to investors.
Additionally, asset tokenization raises significant regulatory questions. While the SEC is still trying to decide whether Ethereum (CRYPTO: ETH) is it a cryptocurrency or a security, what will they think of RWA tokens, many of which have security features?
Finally, RWA tokenization is still such a new trend that it’s impossible to know who the big winner will be. Right now, there are dozens of different cryptocurrencies that identify themselves as RWA tokens. That being said, there is only one RWA token with a market cap of over $1 billion, and that’s Chainlink.
Looking for the next Bitcoin
Today, Bitcoin seems like an obvious investment. To many young investors, it probably seems incomprehensible that when it first appeared in 2009, no one really knew if Bitcoin would succeed. It took Wall Street more than a decade to realize its potential.
Finding “the next Bitcoin” won’t be easy, and it certainly won’t be obvious. You’ll need to find a massive, trillion-dollar market opportunity, and then find a cryptocurrency that can absolutely dominate that market opportunity.
That’s what I’ve tried to do with asset tokenization. Some people will pass up on this opportunity, just like they did with Bitcoin. That’s perfectly understandable. But if real-world asset tokenization takes off, as many expect, then investing in a cryptocurrency like Chainlink could become extremely lucrative.
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Dominic Basulto holds positions in Bitcoin and Ethereum. The Motley Fool holds positions in and recommends Bitcoin, Chainlink, Coinbase Global, Ethereum, and Goldman Sachs Group. The Motley Fool has a disclosure policy.
Forget Bitcoin: This Cryptocurrency Could Be Hugely Lucrative was originally published by The Motley Fool
