The world of cryptocurrency is exploding. However, as they say, "You ain't seen nothing yet".
For all the growth that took place, there is still a major problem with what is going on. We still have not scratched the surface of the potetenial.
Why? The existing laws.
In the United States, most of what is being applied to cryptocurrency by the SEC stems from the Securities and Exchange Act. The problem is this law was passed in 1934.
That means we are looking at digital assets through the lens of a law that goes back 86 years.
To provide some contrast, here is what a new car looked like back then.
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Do you think things changed a bit in the last near century?
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It is not like the first vehicle had an interior that looked like the one from 2020.
Frankly, it is absurd to think about the idea that both those cars are near comparable. Yet, we use laws written in that era to dictate the behavior in the world today.
If we really want to drive home the point, here is a computer from 1934.
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With technology like that, do you think the writers of the laws back then had the mindset to perceive what digital assets would be and a world where trillions of dollars are traded daily, most transactions in a matter of seconds?
The answer is no.
Here is why the need for decentralization is so great. It is the pathway to rapid advancement and innovation.
While the SEC and other alphabet entities will claim they are "protecting the public", the reality is they are just slowing things down. When only the biggest companies can do something due to regulation, that means those without the means will be participate. When it comes to innovation, this is tragic.
The tokenization of everything is what the future looks like. Many still hold onto the idea of one main currency dominating. That is misguided from what I can see. In fact, a decade from now, things will likely be the opposite. There will be billions of tokens out there, representing value of most anything people can think of.
To start, the most obvious arena is real estate. It is ideal for tokenization since it is a non-liquid market that is slow to operate in. Tokenization will bring speed, agility, and the ability to fractionalize. This will open up the market to a much larger group of investors.
Over time, there will be trillions of dollars more pouring into different holdings as the average person gets involved. Tokenization makes properties like low cost stocks, open to most anyone. Today, anyone with a few dollars and a trading account can buy a $10 or $15 stock. Of course, even that industry is starting to offer up fractional shares of companies like Amazon and Tesla.
Decentralized Exchanges
This is probably one of the most important features in the entire cryptocurrency space. Having easy to use decentralized exchanges is what will allow for the archaic laws to no longer be an issue. By having everything regulated, we see it falling into the hands of the same players. Coinbase is looking to go public so who do you think will end up owning that one? The same major players on Wall Street will call the shots.
A decentralized exchange should allow anyone in the world to put up an asset that is for sale to the masses. There should be not onerous regulations or hurdles to overcome. Of course, the buyer needs to be mindful of what he or she is purchasing.
What this does is removes the cost from securitization. Presently, since it has to go through those who are approved, licensed dealers, the cost is great. It costs millions (even tens of millions) to bring a company public. That is an outrageous sum considering the technology that we have today.
Now compare that to the cost of setting up a token tied to a smart contract. That is something that can be coded very easily and in a short period of time. This means that the applicability jumps exponentially. Suddenly, a duplex in Des Moines or a single family home in Dublin can be tokenized.
We also can see investors jump in from all over the world.
Innovation
It is no secret small businesses are being wiped out in droves. We are seeing the elimination of millions around the world. We are nearing a time where the large corporations have an even greater market share. Ultimately, it will form monopolistic conditions whereby people are stuck with one or two choices.
Decentralization and tokenization will help to reverse that trend. It will stimulate innovation leading to the time when anyone can tokenize an idea. Many will be completely worthless. There will be a few, however, that end up being major successes. Of course, this will foster a copycat movement where the idea will be picked up by others.
When you have individuals starting to innovate while having the resources, things really start hopping. Most innovation does not come out of major corporations. Instead, they are the ones to benefit since they take what start ups produce and buy them. This means they have the technology yet someone else came up with the idea.
This also feeds into their power. Once they have the technology, they control it and have the means to keep anyone from entering that realm. Cross the line and a litany of lawyers will show up.
Open source is very powerful. The world is suffering due to the stifling of advancement through the control system. We need to move passed this. Unfortunately, anyone waiting for the system to change will likely be waiting a long time.
It will not change anytime soon.
Thus, it is up to us to do it. Decentralization offers a lot of benefits to the advancement of humanity. Couple this with tokenization and we see a completely new economy form almost instantly. People will be able to invest in projects that are dear to them. The flip side is that the innovators of the world will have access to billions of people with capital looking for a home.
Will there be scams? Certainly. Is there a place for the regulators? Of course. Let us not forget that almost every country has laws in place against fraud. The SEC for example, could leave the innovators alone and just go after the fraudulent cases. That alone would fill their calendar for a few years.
The reality is the tokenization of everything is coming. It is only a matter of time before things heat up. Countries that depend upon their archaic laws will end up falling behind.
It is something that is going to happen very quickly.
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