Today, let’s talk about something super basic but incredibly important if we’re going to get serious about tokenizing assets: asset classification. You can’t tokenize what you don’t understand, right? So, let’s break it down. What types of assets are out there, how are they different, and why does it even matter? I’ll walk you through this step by step because this is the foundation of everything happening now—and what’s coming next.
Financial Assets
We’ll start with financial assets because that’s what most people are familiar with. These are your equities, fixed income instruments, cash equivalents, derivatives—the usual suspects.
Equities
Equities are basically ownership. Now, there are two types: public and private.
- Public equities are stocks of companies like Apple, Tesla, or Netflix. They’ve gone through an IPO (Initial Public Offering), meaning they’re now open to anyone with money to invest. The U.S. is the big player here. The NYSE and Nasdaq are where most of the world’s major companies list their shares. Other countries have stock exchanges too—India, for example, has a booming market, and Hong Kong’s exchange is a key player in Asia—but let’s be honest, their scale is tiny compared to the U.S.
Why are public equities so popular? Liquidity. It’s much easier to buy or sell Apple shares than, say, part ownership in a small bakery in your neighborhood. Now, imagine what tokenization can do for this space: fractional shares, instant trades, and no middlemen taking cuts. It’s going to be cheaper, faster, and way more accessible.
- Private equities are where things get interesting. These are your local businesses, startups, and privately held companies. Most of the world’s wealth is actually tied up in private equities—stores, restaurants, farms, you name it. Now think about this: what if private companies could issue shares as tokens? Suddenly, anyone, anywhere, could invest in a local shop or a startup without being a millionaire. This could unlock a massive wave of growth globally.
Fixed Income
Next up, fixed income. This is all about lending money and earning interest.
- On the public side, we’ve got government bonds. The U.S. government is the king here, with trillions of dollars in bonds owned by everyone from Japanese pension funds to the Chinese government. Bonds are “safe,” so people love them.
- Then there’s private credit—loans made by banks, fintech startups, or even individuals. This space is huge, covering everything from your mortgage to loans for small businesses. Tokenizing private credit could make it easier for people to get funding. A farmer in Uganda could issue tokens to raise money for seeds, for example. The possibilities are endless.
Cash and Cash Equivalents
This one’s simple: cash, but evolving.
- Central banks are experimenting with CBDCs (Central Bank Digital Currencies), which are like digital dollars issued by governments.
- Then there are stablecoins—cryptos pegged to fiat currencies, like USD Coin. These are already being used for instant payments worldwide.
Derivatives
This is where things get a bit wild. Derivatives are contracts whose value depends on something else—stocks, bonds, even weather patterns. They’ve caused financial crises, but they’ve also made people insanely rich. The future of tokenizing derivatives could make this complex market more transparent and accessible.
Real Assets
Now onto real assets—the stuff you can actually touch.
Real Estate
This is the big one. Real estate is worth about $300 trillion globally. People love investing in it, but it’s slow and expensive. Tokenization could change all that. Imagine being able to buy a $10 stake in a skyscraper in New York or a beachfront villa in Bali. No lawyers, no insane fees, just quick, easy transactions.
Commodities
Think gold, silver, oil, or even agricultural products like wheat and coffee. Tokenization could let farmers in developing countries sell tokenized futures on their crops, giving them much-needed cash flow upfront.
Other Physical Assets
This one’s fun. People are already tokenizing wine, whiskey, and even rare sneakers. Why not? If it’s valuable and physical, it can be tokenized.
Intangibles
Here’s where it gets abstract but interesting: intellectual property.
- Brands, patents, trademarks—they’re worth billions, but they’re hard to value or trade. Tokenization could make it easier for inventors, artists, and companies to monetize their ideas. Imagine investing in the next big tech patent or owning a piece of a blockbuster movie’s royalties.
Alternative Investments
This is the catch-all category for anything that doesn’t fit neatly into the others. Think art, collectibles, and, of course, crypto.
Art
Art is evolving fast. We’ve got physical pieces, digital works, and hybrids. NFTs (non-fungible tokens) have already made a splash here, and the trend is only going to grow.
Crypto
And finally, crypto itself. At first, traditional finance dismissed it as a fad. But now, Bitcoin is recognized as its own asset class, separate from equities or commodities. Ethereum, Solana, and other platforms are expanding the possibilities of what crypto can do. This is where tokenization gets its foundation—and its future.
Why This Matters
Understanding asset classification isn’t just academic. It’s the starting point for creating the tokenized future we’ve all been talking about. When you know what an asset is, how it works, and why it’s valuable, you can start imagining how to tokenize it—and what kind of opportunities that could unlock.
This isn’t just a shift in technology; it’s a shift in how we think about ownership, value, and investing. We’re building a world where anyone can own anything, from a share in a company to a slice of farmland, with just a few clicks. That’s the future we’re heading toward, and it’s exciting to think about.
What do you think? Which asset type do you think will be tokenized first on a massive scale?