While the volatility of the market has returned, many are quick to proclaim crypto’s demise. Having the opportunity to say “I told you so” is hard to resist. These voices have been active for years and will not quiet now. The recent hash war between Bitcoin Cash ABC and Bitcoin Cash SV further muddies the waters of clear crypto debate. Journalists will jump at any who declare the death of Bitcoin. The memes will be recycled.
But viewing utility of cryptocurrencies through price alone misses the fundamental revolution. Cryptocurrency and Blockchain have uses far beyond price.
Asset Tokenization has the potential to be just as transformative.
The Blockchain, Asset Tokenization and Investment
Asset Tokenization refers to the linking of a real-world, physical asset, with that of a digital asset in the form of a token on the blockchain. Stablecoins, in principle, are an already functioning example of this development. CENTRE’s USDC is pegged to the US dollar. Regardless of your opinion concerning pegging a cryptocurrency to a fiat currency, stablecoins are the first working iteration. As the volatility in crypto markets continue, contractors and employees who are paid in cryptocurrency will begin to hold whatever they earn in stablecoins to avoid volatility.
Both cryptocurrencies and the ability of Asset Tokenization grant a significant privilege: access. In the case of cryptocurrency, this access comes in the ability to transact. With Asset Tokenization, one can have the ability to invest.
Engaging in trade is necessary for the space to grow. People want to buy Starbucks coffee with crypto. After all, the full title to Satoshi Nakamoto’s White Paper is Bitcoin: A Peer-to-Peer Electronic Cash System.
But there are those who also want to safeguard and invest their wealth who do not have access to varied investment options. They might be intimidated by the complicated investment vehicles of traditional equity markets. Asset Tokenization allows investment in something tangible, something they can see.
Viewing crypto adoption as a zero-sum game is counterproductive. With Asset Tokenization, individuals can participate through fractional ownership. The implications of such a move are difficult to overstate. Like “loosey” cigarettes sold on the streets of New York City for twenty-five cents when packs cost $13.00, fractional ownership grants participation in exchange for a much lower price. The barriers of entry for investment have been made irrelevant.
Tokenizing a Piece of Luxury
Real estate is marked as one of the industries that crypto will upend. Smart contracts have the potential to eliminate inefficiencies in the market. The Asset Tokenization of Real Estate presents another use.
A luxury condominium in Manhattan has already issued tokens that represent fractional ownership of their property. Wealthy individuals from other countries purchase Real Estate as a safe haven for their assets. Property values rise to such a point as is untenable for many local residents to afford.
Residents who might not have $1 million to invest and can participate in the appreciation of the property without holding ownership.
And Real Estate is one example. We have already seen fractional ownership applied to a Picasso. And while the owners will not have access to view the painting, they still share in the potential rise in value should the painting be sold.
And this is only the beginning. According to Andreas Antonopoulos, we cannot yet imagine all of the possibilities. “You can imagine currencies that are used to represent commodities or Assets, that represent sharing tokens for a taxi service or represent all kinds of things that we haven’t imagined yet.”
While the price of the total cryptomarket gets the most news, paying attention to the possibilities and imagining their impact will sustain those who here for the technology.
Image Source: “Flickr”
Carlos Acevedo is a writer and educator whose crypto-journey began not so much with Bitcoin but with Dogecoin in 2014. And while that involvement was not insanely profitable, the experience in fundamental best practices in using crypto became useful when the boom of 2017 occurred. Already in possession of a Coinbase account after hearing Andreas Antonopolous on the Joe Rogan Experience, he was primed to jump right in and has not looked back since. Studying cryptocurrency and exploring its potential, pitfalls, and possibilities has become a part of his daily life. You can find him on Twitter at @CLAcevedo222.