The world is undergoing a massive change and this feature is being overlooked. We are going to see a much different future due to three factors:
We are looking at something that has massive economic potential. Yet few are discussing it.
The last time something like this happened, we have to harken back to the days of the East India Company. From there, we could move onto the construction of the railroads in the United States. Needless to say, we are embarking upon something that hasn't been done in hundreds of years.
A noted difference is that, today, things move much faster due to technology. This means we see impact over 20 years which took a century.
Fractional ownership is going to radically change everything.
Tokenization and Fractional Ownership
We know the stock market is enormous. This is a system that was designed to provide ownership stake to many different people. If we go through history, we see the boom that is tied to this ownership structure.
The United States equities market is worth in excess of $100 trillion. That is a lot of money tied to one market and shows how large things can become.
We naturally have a lot of offshoots of this system such as the debt market along with private equity. All of this can be enhanced by tokenization.
Owning assets is a wealth building tool. Throughout history, this is how people were able to move up in economic class. It also enhanced the local economy as more revenue flowed into particular regions.
Unfortunately, for much of the world, this is off-limits. In the developed world, the best deal are reserved for accredited investors. At the same time, few have the capital to acquire enough to get "life changing money". The Warren Buffett model works if you have a lot of money to invest. However, if you are dealing with a few hundred dollars, even a 20% return is not going to get you very far.
Here is where cryptocurrency enters. Even though much of the focus is on speculation, we can see how projects structured in this manner could end up being highly successful. This is no different than many start ups.
The major difference is there is no need to go public to "get paid". This is how venture capital firms and founders end up striking it rich. With tokenization, it is already built it.
Distribution Lower The Barrier To Entry
We discussed the idea of broadcast television. Consider what was required to set that system up. Satellites were launched, cables run, and a lot of infrastructure was put in place. This took decades to roll out, with rural areas being the last to get the services.
The Internet changed all this. Netflix was able to reach more people in a shorter period of time than Blockbuster which relied upon physical stores. Then we have streaming versus traditional television. The change in this model saw prices drop significantly. It is a situation that is causing a lot of pain for the traditional companies.
Tokenization lowers the barrier to entry for financial services. This, in turn, means we are providing access to wealth that normally did not exist. This is crowdfunding on steroids.
Of course, the establishment does not like this idea, something it is fighting. The problem is that, historically, trying to stop technology is a fool's game. Turning to the courts never works. Look at Napster. The record companies were able to win against that company yet lost money for 18 straight years on record music due to music download.
The technology that is rolling out tied to tokenization is going to transform everything. It is to the point where fractional ownership is most certainly the future.
Why Fractional Ownership?
Why would anyone want to embark upon the concept of fractional ownership?
This all starts with risk. Those who excel financially understand that risk management is crucial. This means investing in ways that lower the potential downside.
Let us use an example: the tokenization of robo-taxis.
Here is an idea of how we can see a few technologies coming together. If self driving automobiles are in our future, this means we are likely to see a day when the human is removed. These are being called "robo-taxis".
If we consider owning a fleet in a city, we can see how there is financial vulnerability. What happens if the city enters a recession? This could affect business.
With fractional ownership, we can invest in a fleet of robo-taxis across the country (or world). Even though we have smaller pieces, it is put into more taxi networks. By having, say, 10 cities, then we all spread the risk out.
Another factor is amount of capital required. We often do not have the resources on our own. This means that tapping into capital markets is required.
Tokenization solves this problem. There are plenty of investors looking for opportunities. It is a situation that will likely grow when billions are involved in cryptocurrency. Look at what the existing financial system was able to do in dealing with millions. Consider the amounts we will be dealing with when that is 20x what it is today.
This is going to revolutionize the capital markets. By removing friction from the system, we see the distribution and access explode. This is something that will have an enormous financial impact.
Tokenization Of Real Estate
Fractional ownership is ideal for real estate. This is already something that is big in that sector, especially when dealing with commercial properties.
Tokenization moves real estate to a completely different level. To start, let us look at the idea of financing. Today, one gets a mortgage on a property through a bank or associated financial institution. After that is completed, the loan is usually sold to a Wall Street institution that ends up fractionalizing the ownership of the debt.
Why go through that step?
With tokenization, fractional ownership could occur from the start. The property could be financed through tokens, perhaps using another digital asset as collateral. However it is structured, pools of capital can be set up for this purpose. It is no different than a liquidity pool for swapping, only this time the design is for funding of residential properties.
The global real estate market is worth a couple hundred trillion dollars according to some estimates.
Earning Tokens
One of the reason that fractional ownership is the future is the entire system is being constructed around this.
With cryptocurrency, we see people being rewarded for certain activities. An ecosystem like Hive offers a prime example. People engage in typical social media activities, just like on Twitter and YouTube. However, instead of receiving nothing financially, these people can be rewarded in tokens.
Once this is accomplished, people have assets in their wallet. Essentially, they are being paid in something akin to stock. It is an ownership piece albeit without the same rights to assets or profits as being a shareholder. Nevertheless, they are involved and have to make a choice regarding what enters the wallet.
Here is where the opportunity to get involved in other projects enters. Perhaps the coin or token earned is not of interest to the individual. That said, if there is something else that one feels more optimistic about, he or she can flip into that.
This is how things can expand rapidly. If a few of these projects earns an outsized return, the numbers get mind-blowing. This capital can then be used for other purposes, repeating the process.
Fully Inclusive
The original stock investors were the wealthy aristocrats in Europe. This spread, over the centuries, to millions of people in the developed world. Nevertheless, we still see billions who are not involved with the ownership of assets whatsoever.
Due to the risks involved, it will make little sense to own things entirely. With tokenization, assets can be easily split up, providing a hedge. The money raised from this move can then be put to work elsewhere, reducing the vulnerability of failure.
We see how this spreads things across billions of people. If someone loses $100, it is not the end of the world, The situation is much different if that total reaches $10K or $100K.
Fractional ownership through tokenization is a game changer. It will take a while for the system to fully evolve. However, this will likely be the norm 15-20 years from now.
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