Litecoin’s Charlie Lee Says “99% of Tokenization Is Hype” Despite Ethereum, XRP Ledger Growth

Litecoin (LTC) founder Charlie Lee has challenged a popular crypto narrative and stated that “99% of tokenization is hype and not useful.” His remarks come as the tokenized real-world asset market is gaining momentum on the Ethereum and XRP Ledger networks.

Litecoin Founder Weighs In On Tokenization Space

Speaking at CoinGape’s Voice of Web3 podcast, Lee threw out a question about the benefits of placing assets such as real estate, equities, and bonds on blockchain. This narrative contradicts Ethereum dominating the tokenized asset market with over $203 billion in total asset value.

Moreover, XRP Ledger recorded growth in RWA. The network boasts more than $3.6 billion in tokenized asset value and approximately $1.9 billion in net inflows over the past 90 days.

Talking about tokenization in real estate, Lee said that the records on blockchain don’t necessarily constitute the final record of ownership. He took as an example that a deed for a house was put on a blockchain. Thereafter, Lee asked if the theft of the deed from a wallet’s owner by a hacker would automatically make the hacker the legal owner of the house.

“The actual source of truth is some government ledger,” Lee said. He questioned, “If the source of truth is not the blockchain, then what’s the point?”

Lee says that tokenization only makes sense if the blockchain’s own records of ownership are used. He explained the difference between tokenized assets and cryptocurrencies like Litecoin, where the private key is the control of the asset, while with the latter, no one can block transactions.

The Decentralization & Liquidity Factors In Focus

He also spotlighted the importance of decentralization in digital assets such as Bitcoin and Litecoin. Lee declared, “The blockchain is the source of truth for crypto.”

Lee also raised a point about the fact that tokenization doesn’t necessarily make something liquid. Supporters say that assets on-chain enable global investors to trade them 24/7, but he said liquidity is ultimately a function of demand, not technology.

“Liquidity only comes if there’s demand. Just putting stuff on the blockchain doesn’t automatically create liquidity,” Lee added.

Nowadays, tokenizing is gaining traction with crypto exchanges and blockchain networks competing to include stocks, bonds, treasuries, and real estate on its network. However, Lee proposed that there are many projects that are similar to past blockchain movements which have tried to implement technology first, and then found a helpful use case.

Still, the Litecoin creator emphasized that some of the current tokenization projects may be beneficial. Nonetheless, he noted that most initiatives have not yet proven the need for decentralization and he remains unconvinced of the long-term worth of the sector.