Forget Bitcoin: This cryptocurrency could be extremely profitable

right now Bitcoin (BTC 1.43%) it 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 value of the entire cryptocurrency market.

However, there’s a good chance you’ve already missed Bitcoin’s amazing run. So you will have to find another cryptocurrency that has a chance to be as profitable as Bitcoin was. That cryptocurrency could be Link (BUNDLE 2.00%)which is at the forefront of what could be a multi-trillion 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. This refers to the process of converting traditional financial assets into digital assets that can live on the blockchain. Once they are on the blockchain, it makes them much easier to trade and much more accessible to a wider audience of potential buyers. As a result, RWA tokenization offers enormous liquidity, transparency and accessibility benefits.

Image source: Getty Images.

According to the Boston Consulting Group, this could be a $16 trillion market opportunity 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 top names on Wall Street — including Goldman Sachs Group (NYSE:GS) and BlackRock Inc. (NYSE: BLK) — gets involved. In fact, BlackRock CEO Larry Fink believes asset tokenization could be even bigger than the launch of new spot Bitcoin ETFs.

Do I still have your interest? Obviously, any cryptocurrency that can feed directly into the RWA tokenization trend could become very valuable. If asset tokenization is a $10 trillion market opportunity, and if Chainlink can capture just 10% of that value, that’s $1 trillion — or about the same value as Bitcoin today.

How does Chainlink fit into the asset tokenization trend?

Long-time crypto investors will probably recognize the name Chainlink, as it was one of the cryptocurrencies that led the decentralized finance (DeFi) charge during the previous crypto bull market rally. Chainlink’s value skyrocketed during the peak of the DeFi race in 2020-2021, but has since fallen out of favor with investors and is now trading nearly 80% below its May 2021 all-time high.

Chainlink founder Sergey Nazarov is convinced that tokenized assets could end up being bigger than crypto — in short, that the value of all tokenized assets will one day exceed the value of the crypto market. Already, tokenized assets are bigger than DeFi, which is one of the most important value drivers in the blockchain world.

Chainlink has become increasingly vocal about how it can play a role in asset tokenization. Nazarov believes that Chainlink can solve the three biggest problems that prevent the general adoption of RWA tokenization. In theory, every problem Chainlink can solve makes it more valuable.

For example, one big problem is known as “cross-connectivity”. This relates to the challenge of moving tokenized assets across different blockchains. To solve this problem, Chainlink developed a blockchain protocol known as CCIP (Cross-Chain Interoperability Protocol) and worked with real-world financial institutions to implement it.

Risk factors

Investing in Chainlink is not for the faint of heart. That’s because Chainlink’s performance lately has been absolutely awful. It is down 25% for the year and is now in danger of falling out of the top 20 cryptocurrency list. As mentioned above, it is also trading 80% below its all-time high of $52.88. If you’re skeptical, you could be forgiven for thinking that Chainlink’s embrace of asset tokenization is a desperate attempt to stay relevant to investors.

Additionally, there are significant regulatory issues related to asset tokenization. If 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-like features?

Finally, RWA tokenization is still so new as a trend that it is impossible to know who will ultimately be the big winner. Right now, there are dozens of different cryptocurrencies that self-identify as RWA tokens. That being said, there is only one RWA token with a market cap greater than $1 billion and that is Chainlink.

In search of the next Bitcoin

At this point, Bitcoin seems like a simple investment. For many young investors, it probably seems incomprehensible that when Bitcoin first appeared in 2009, no one really knew if it would be successful. It took Wall Street more than a decade to wake up to its potential.

Finding the “next Bitcoin” won’t be easy, and it certainly won’t be obvious. You will need to find a huge, trillion dollar market opportunity, then find a cryptocurrency that can absolutely dominate that market opportunity.

That’s what I tried to do with asset tokenization. Some people will pass 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 an investment in a cryptocurrency like Chainlink could become extremely profitable.