The inclusion-exclusion scenario is central in the discuss of cryptocurrency and the establishment of a new financial system.
Our present framework is bitten by two major bugs:
- it is exclusionary
- it is run by gatekeepers who extract massive amounts of value
All of this leads to the divide we see where a growing percentage of the funds move into the hands of those dominating the financial sector. Once again, if you want to understand what is going on, learn what the banks do. That gets around the ideologies and political nonsense.
Tokenization is very powerful. In fact, when it comes to the structure of the financial makeup of society, this could be the most impactful financial change we ever saw.
Of course, those on top, i.e. banks, are doing all they can to maintain their place. Due to their money and political connections, we see regulation working in their favor. The most recent changes in the GENIUS Act show this.
RWA could open up wealth opportunities to billions.
Tokenization of Real World Assets (RWA) Brings Accessibility
Real estate is one of the largest markets in the world. At the same time, private equity is one of the most lucrative.
For the average person, even in the United States, this is out of reach.
Affordability issues arise with real estate. Few can afford a property in a city such as New York. The same is true for most major cities around the world.
Then we have private equity. Here we see the "accredited investor" requirement. To be involved, one must be deemed worthy. What is the qualification? High net-worth. One can be a total drugged out scammer as long as the money is there.
All this results in only about 10% of the United States population involved in these two areas. The remaining 90% are stuck on the outside. Sure, we can invest in things such as stocks after they go public, a move that insures much of the early run was missed.
Take a company such as SpaceX. Some might feel optimistic about what that entity is doing. It doesn't matter. Unless one has the big bucks to enter, it is a waiting game. By the time this company goes public, it could be worth hundreds of billions. Who received that value? The high net-worth people who are involved of course.
Tokenization changes all of this. It is something that firms such as Robinhood are looking to implement.
Real World Opportunities
Do you think ownership of real estate in New York, San Francisco, or London is a good investment? If you do, are you able to participate?
If yes, congratulations. For most, even if they believe this could be a good way to build wealth, no entry. Tokenization would alter this by allowing people to get a piece of the pie.
This is what is known as fractionalization. Assets in these cities are tokenized, with each representing a piece of the total entity. It is akin to how stock represents an ownership stake in a total company.
Here we see the shift where anyone can own a token (or fraction of) for properties in some of the highest priced districts in the world. If I think Park Avenue (in New York City) is going to continue to thrive, I can drop hundreds or thousands of dollars. Personally, I am not in the situation to lay down millions on a single unit, even through debt.
Of course, for this to happen, it has to be open to everyone. So far, the real world assets that were created are for institutions and the abovementioned investors. In other words, it is more of the same.
The Major Shift
There are two ways this change can occur. Well, actually, there are three since we will likely see a combination of this.
The first is to create more accredited investors. I believe the barrier is still a million dollars (in the United States) as the level to participate although there are other provisions. This means having assets totaling more than that, less outstanding debt.
I bring this up because we can see how this could be reached via crypto-assets. There are many who are holding Bitcoin, either the coin or through an ETF. If the price keeps appreciating, we could see more people qualify under this classification.
Another option is to simply offer these opportunities outside the hybrid system that is being constructed. What I mean by this is decentralized real world assets. Naturally, this excludes things such as real estate, since they tend to be high regulated. Other assets, such as a fleet of robotaxis in some cities could be set up on one of the EVMs (as an example).
As infrastructure is built, especially in the decentralized realm, we see how this could offer much greater potential. Innovation is key and millions could start experimenting. The success models will be duplicated, providing the general crypto user with many alternatives. Of course, this is a double-edged sword since losses will take place. Welcome to the world of the big game hunters.
Are most ready for this? Based upon the reactions within crypto, I would say not. When there is a downturn, people lose their cookies. It shows a lack of preparedness emotionally.
Nevertheless, people have that right in my view. Fraud, rugpulls, and scams should be handled by governments. However. barring everyone because some might not be prepared to participate is not part of the regulators job. They should not try to protect people from themselves.
Unfortunately, the headlines will focus upon the RWA scams. This is what the media does. Politicians will then grandstand, telling voters how dangerous this is. All the while, there will be those who are mentally and emotionally capable who will thrive.
The opportunities will be presented. Tokenization is changing everything.
Posted Using INLEO
