There’s a financial revolution underway. Banks, payment processors, and institutions are shifting transactions and asset ownership onto the blockchain. As a result, the cryptocurrency industry could move from the fringes of traditional finance to being embedded in its very foundations. For long-term investors, that’s a move worth paying attention to, particularly if you’re looking for cryptos to buy and hold forever.
Tokenization, a way to record ownership on the blockchain, is at the core of this dramatic change. Moving assets on-chain can make them more accessible and reduce transfer costs and friction. It can apply to stocks, private equity, U.S. Treasuries, real estate, commodities, and more. Stablecoins, tokenized versions of traditional currencies, soared last year.
Here are three cryptocurrencies that could benefit from tokenization, making them strong buys.
Image source: Getty Images.
1. Ethereum
Today’s Change
(-5.19%) $-112.96
Current Price
$2064.65
Key Data Points
Market Cap
$249B
Day’s Range
$2061.08 – $2178.23
52wk Range
$1398.62 – $4946.05
Volume
17B
Ethereum (ETH 5.19%) was the first cryptocurrency to introduce smart contracts, the technology that enables tokenization. Almost 60% of all tokenized assets are on its ecosystem, which puts it in pole position to benefit from growth in this sector. To give you an idea of what might be possible, Ark Invest predicts the market could surpass $11 trillion by 2030 — up almost 58,000% from $19 billion today.
Its reputation for reliability and security has made it an appealing, compliance-friendly choice for traditional institutions. For example, JPMorgan used Ethereum to launch its first tokenized money market fund last year. BNP Paribas Asset Management is also exploring tokenized fund issuance on Ethereum.
Ethereum dominates the tokenization market, though that won’t last forever. Some companies are already creating their own private blockchains, and other public blockchains are also gaining traction. But given the sheer scale of potential growth, Ethereum only needs to retain a fraction of its current market share for the value and transaction volume on its ecosystem to soar. Historically, there’s a strong correlation between total on-chain funds — where Ethereum has a significant lead — and price.
2. Solana
Today’s Change
(-4.66%) $-4.27
Current Price
$87.50
Key Data Points
Market Cap
$50B
Day’s Range
$87.11 – $92.46
52wk Range
$70.61 – $252.78
Volume
3.6B
Like Ethereum, Solana (SOL 4.66%) is a smart-contract crypto. What sets it apart is its speed and low transaction costs. Solana can process more than 2,000 times more transactions per second (TPS) than Ethereum, and operates at a fraction of the cost. It is one of the few cryptocurrencies that can rival Visa‘s processing power of 65,000 TPS.
As banks, card networks, and payment processors adapt to stablecoins, those metrics matter. Solana’s scalability is already attracting traditional players. For example, Visa opted to use Solana for its pilot U.S. stablecoin integration. Western Union will launch its U.S. dollar stablecoin on Solana, too.
Another use case is tokenized stocks, which are on-chain representations of shares in publicly traded companies. Nasdaq recently got approval from the Securities and Exchange Commission (SEC) to trade tokenized versions of certain securities. It is partnering with Kraken-backed xStocks on the initiative. xStocks was originally launched on Solana, but now also integrates with Ethereum and other blockchains.
3. Chainlink
Today’s Change
(-4.78%) $-0.45
Current Price
$8.92
Key Data Points
Market Cap
$6.3B
Day’s Range
$8.90 – $9.44
52wk Range
$7.40 – $27.70
Volume
359M
Chainlink (LINK 4.78%) is another crucial component of the infrastructure behind tokenization. It is an oracle cryptocurrency, which means it acts as an information bridge between blockchain networks and the real world.
Smart contracts are self-executing pieces of code. A smart contract might be programmed to release payment when goods are received, or pay out an insurance claim when certain criteria are met. If they don’t have accurate data, they may be wrongly triggered. That’s why Chainlink has partnerships with a host of big names in both blockchain and mainstream finance.
Going back to the xStocks platform I mentioned above, it wouldn’t work without Chainlink. Tokenized stocks require accurate price feeds so that the on-chain version of a stock trades at market prices. Oracles also bridge between blockchains, enabling xStocks to run on more than one platform. They help with compliance and check proof of reserves, ensuring there’s adequate backing for the tokenized assets.
It is still early days for tokenization
These three cryptocurrencies could each play a significant role as tokenization takes off, making them strong buys in my book. Even so, crypto is still a relatively new and risky asset class that should only make up a small percentage of your portfolio.
Evolution of a new technology or infrastructure rarely happens in a linear fashion. Traditional financial institutions are piloting projects and experimenting with different blockchains to find the best way to integrate them. The end result probably is a patchwork of private and public blockchains, including Ethereum, Solana, and Chainlink.
