The tokenization of everything is coming.
It is a topic that was long discussed in the crypto world. Like most things regarding technology, it is a bit slow in emerging.
We see the concept being altered a bit. The conversation now centers around the tokenization of real world assets. This is mostly due to the entry of Wall Street into the crypto space. Firms such as Blackrock, led by CEO Larry Fink, are all in on this concept.
Unfortunately, this is only the tip of the iceberg. It does, however, provide us with a starting point to what the future will look like.
History is providing us a great deal of insight into what is taking place. The lessons from the last 3 decades of the Internet gives us a course to follow. It also provides warnings to some of the pitfalls we can encounter.
In this article we look into this.
Democratization Via Tokenization
We have seen a massive amount of democratization due to the Internet. Even though this turned into a siloed system, when it comes to information, it is night and day.
Forty years ago, information was scarce. It has a cost to it. Newspapers, television, and magazines were the main pathways. We can also add in movies along with books.
Today, we have a completely different world. Information is near instant and exists everywhere. X is now, reportedly, the number 1 source for news. This is a platform where the users are the ones providing the content. Then we have YouTube dominating the streaming realm, also driven mostly by users generated videos.
The challenge with this system is the fact that we are naming specific platforms. Overall, we can say there are no monopolies since many alternatives exist. Naturally, the traffic doesn't follow that but we are not restricted only to YouTube, X, or Meta applications.
It is still a lesson. The next generation Internet has to include more non-centralized platforms.
Cryptocurrency - User Generated
Most can follow the concept of user generated content. Of course, if we go back 40 years, few would have considered this viable. After all, who could produce news to rival Rather, Brokaw or Jennings, the kings of news at the time?
Breaking up the monopoly on information was just the start. We now have 30 years of evidence as to what occurs. Cryptocurrency allows for the same concept to be applied to money.
The generation of money, just like content, was monopolized. Under fractional reserve banking, the creators of money are the commercial banks. These expand the money supply through the use of lending.
Basically, the money supply increases if the pace of loan creation is faster than the payoff or default rates.
Cryptocurrency changes that.
Blogspot and Wordpress changed the information game forever. It allowed anyone to become a "jourbalist". Cryptocurrency enables anyone to create money.
Here is where we look at the lesson. It is extremely valuable in the "price go up" world of crypto.
Is most of the content created online worth much? In other words, is there a high level of quality and knowledge?
The answer is no. Most of the stuff online is junk. We are aware of that. Nevertheless, there are gems contained within the cesspool of nonsense. Many have their favorite creators in whatever field of interest they have. Here is where value is provided to the users.
Some have 1,000 followers, others hundreds of thousands.
We will end applying the same logic to cryptocurrency. Most of what gets created will be junk. It will have little-to-no value. That said, there will be a fair number that become major players. Just like "influencers", we will have some major winners in the monetary arena.
Real World Assets (RWA)
The discussion around RWA, is just a start. It is a point where we could see options opened up to the masses, albeit under a centralized realm.
Wall Street is pushing in this direction and it will succeed. In the future, stocks, bonds, art, and a host of other assets will be traded on blockchains. This will allow people to easily acquire stake in many different realms.
This is Wall Street's view of the world. Where things get cloudy is with the creativity of people. Innovation is going to be the driver.
We are going to see many ideas coming forth. Tokenization will allow for the democratization of anything. People will be able to capture value in whatever they assign it to.
For example, could there be the tokenization of volunteering? This is something that is done throughout the world but for no financial gain. It is why it is called volunteering.
What is the person's time was compensated for? This could evolve into an ecosystem around that subject.
Then we have hobbies and other areas of interest. Again, we see time dedicated, value generated, yet none of it captured. Tokenization allows for that.
Could it be where one engages in his or her hobby and then uses those resources to accumulate wealth in stocks, bonds, or art? It seems like it is plausible.
One final point: tokenization is ultimately data. Thus, we are dealing with a system that allows for the capture of anything that is represented by data. Here is where we can expand this idea to anything in the real world.
Will it have value? Again, we turn back to the lessons of the Internet. Very little online, individually, has much value. It is the collective.
It is where the future transformation occurs. I foresee a massive increase in collective value driven by tokenization, which leads to democratization.