Coinbase may dominate Real World Assets tokenization
by Zain Jaffer
Recently, crypto expert Qiao Wang tweeted something about how Coinbase may end up dominating the Real World Assets tokenization sector. Here is what he tweeted:
It looks like Base will be the defacto chain for “regulated DeFi”, including RWAs. Over 100M KYCed users from Coinbase ready to go. No other chain can easily create this identity layer, nor the brand they have with tradfi asset issuers. Long $COIN.
I somewhat agree with him, although of course no one can predict the future. Though what he points out makes sense. Coinbase already has 100 million users who have already submitted KYC/AML (Know Your Customer/Anti Money Laundering) requirements. That’s not trivial. Getting to 100 million pre-screened users for security tokens is a huge advantage. Of course anything is possible especially since Wall Street has entered the frey with Exchange Traded Funds (ETFs), but having that many users can be considered Coinbase’s moat.
This is because RWA tokenization will require secure securitized tokens that will eventually replace paper certificates as the basis of ownership transfers and transactions. Since Coinbase’s Layer 2 Base sits atop Ethereum, it also inherits its security when the transaction finalizes.
You will want that when you sell your house or car on the blockchain. Having thousands of validators saying you are the new owner, or you are the former seller, in an immutable way is vital. It cannot just be based on a handful of validators that can suffer a 51% attack. With Base on Ethereum, it will take a lot of computing power to hack that RWA tokenized record.
Plus the Coinbase brand is already trusted. The memorable ads that Coinbase has been running on changing the system to reflect the needs of Gen Z and Alpha is not lost on millions of Americans [See https://www.youtube.com/watch?v=R84eq4ll_B4]. Right now, many are struggling to pay their bills because of student loans, car loans, high mortgages, and credit card bills. The Coinbase ads are striking a deep chord in many people.
Coinbase has also developed a system that will allow institutions to use it confidently [https://www.coinbase.com/institutional]. Plus it is the custodian of choice by most of the Bitcoin spot ETF applicants like Blackrock, with the exception of a few. It is one of the few institutions that can stand up to unfair attacks from the US government. After all, who would want to trust a fly by night custodian that does not use a multisignature approval wallet, is not properly security audited, and uses non-institutional grade wallets for your corporate crypto assets.
Tokenizing RWAs will remove the criticism that crypto has no underlying intrinsic value. Pretty soon, many tokens will represent stocks, bonds, certificates of deposit, car sales contracts, home titles of ownership, and the like. But getting there may take a lot of effort, especially with the bad reputation that crypto has managed to get over the past few years because of fraudsters and scammers.
It may take a household name like Coinbase to convince most people and major institutions to finally go along with this major revolutionary change.