The original source of the news is Bloomberg: HSBC Holdings Plc has launched a platform that uses blockchain technology to tokenize ownership of physical gold in its London vaults, Mark Williamson, global head of foreign exchange and commodities partnerships and propositions, said in an interview.

In HSBC's new system, one token is equivalent to 0.001 troy ounce, while a London gold bar is equivalent to 400 troy ounces, HSBC said in a statement. The bank said the system could be used for retail investors to invest directly in physical gold in the future if local regulations in their countries allow.

Through this news reported by Bloomberg, it can be clearly seen that financial institutions are also using blockchain technology to improve the original "backward system". In the foreseeable few years, the RWA track will be divided into two categories, and each will accelerate the integration of Web3 with the real financial world in different ways.

The first type of RWA project will be driven by large institutions and regulatory agencies, and will be fully compliant with the legal and regulatory aspects, such as the HSBC mentioned above. Such projects will be safer and will be subject to more restrictions such as KYC and AML. In the eyes of Web3 idealists, such "pseudo-decentralized" projects may be looked down upon.

RWA projects, which focus on compliance, are likely to become the driving force of the Web3 industry in the next stage. Even at present, the most well-known USDT and USDC are actually RWA projects. With the outbreak of the RWA track, there will be more and more RWA projects that tokenize US debt, and the Web3 industry will gradually be deeply bound to the US dollar.

The second type of RWA project will be a native Web3 project that uses smart contracts to implement over-collateralization, liquidation, oracle mechanisms, etc. Similar to the Mirror project on the Terra chain, or Synthetix. However, the crypto assets mapped by this type of RWA can only be linked to prices and cannot realize rights and interests. In the absence of owning the underlying asset, creating something out of thin air through over-collateralization will also be a bubble that accompanies the outbreak of RWA.

I personally believe that the breakout point of the RWA track will be after the Bitcoin ETF is approved. When cryptocurrencies are truly accepted by the mainstream financial market, more traditional financial targets will be tokenized. The tokenization of these RWA assets will inevitably lead to a new spring for the DeFi track.

In addition, there are many RWA projects currently dedicated to mapping some fixed assets to Web3, but I have to point out that, for now, not all real assets are suitable for the RWA track. The first one to bear the brunt is real estate.

Real estate has its own particularity. First of all, it cannot be digitized. Unlike gold, US bonds, and the US dollar, these three can be digitalized and tokenized through measures such as ETFs and value anchoring, and then accepted through rigid redemption, thereby realizing the corresponding value transfer to Web3.

The value of real estate depends on the legal ownership, not the market price. The final ownership of a real estate will not be legally recognized by RWA, so this is also what I think is the limitation of RWA, that is, RWA cannot achieve value transfer in the legal sense in the short term.

Imagine that you spent a lot of money to buy a real estate from an RWA, but when you actually went to fulfill the contract and claim the real estate, you found that the real estate was registered by someone else and the local law does not recognize the RWA's transfer of ownership. Or when the real estate is actually transferred, it will be restricted by nationality and local policies and cannot be completed.

Therefore, I think the explosive growth of the RWA track will be centered around the three most easily digitized and tokenized assets: currency, bonds, and stocks. For example, bonds and stocks can be circulated internally within the scope of cooperation through brokerage cooperation. So when readers are looking for RWA projects, they may want to look for those RWA projects that are most likely to be implemented first.