Digitization Of Assets Is Going To Change Everything
We are moving from an analog to digital world. That is something which cannot be disputed.
Nowhere will this have more impact than the digitization of assets. Cryptocurrency offers the potential to change not only money but, also, every asset class there is.
Some question the speculative nature of this technology and whether it will really be disruptive. In my mind, there is little to debate. We are going to see this happen and it will take place in a gigantic way.
How can I be so sure?
The fact that many Wall Street institutions are positioning themselves to take advantage of the shift tells me all I need to know. Entities such as JP Morgan are not opening up crypto trading desks to sell retail customers a few Bitcoin here and there. They are after much bigger fish.
In my view, Wall Street is looking to capitalize on the digitization of assets. "Securities" is a term that encompasses many asset classes, all of them with different needs and uses. Digitization offers all an easier way to transact.
Look at the progression of music. Originally, it was in an analog format. Once it moved to digital, companies really started to innovate. The record companies were slow to change meaning that a technology outfit such as Apple was able to enter the market via innovation. Finally, full digitization took place where everyone embraced the new format.
This will take place with all asset classes. The advantages of digitization offers too many benefits including less friction and reduced fees. This does not paint a pretty picture for those companies that benefit from the present system that is full of friction.
What is really at stake?
The music industry amounts to tens of billions of dollars. Ownership, on the other hand, reaches into the hundreds of trillions, if not quadrillions. The numbers we are talking about is simply too big to ignore.
Facebook already staked it claim to a new market by proposing the Libra. While a separate entity, it still stands to benefit the company a great deal. The interest payments on the money alone could amount to hundreds of billions of dollars.
Look for companies outside the traditional financial sector to involve themselves in the digitization of assets.
Imagine digital securities "flowing" as easy as a song moving into one's playlist on Pandora. Once something is digitized, it moves freely. Ultimately, it is bits of data that is being moved; what is represents means little to the "flow" of the system. A digital packet representing a song is the same as a token that is tied to a hundred million dollar piece of real estate.
Private assets are very inefficient to move. By digitizing them and then putting them on public markets, it is very easy to move things around. Ownership literally takes place with the click of a few buttons.
With trillions being converted over, now is the time to enter the this sector. Those who are in early stand to gain a great deal.
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It seems to me that tokenizing assets is all well and good but trying to do so with physical objects seems to only lend itself to fractional ownership cases. Maybe tracking but that is pretty weak in my view.
That is the idea of tokenization...fractional ownership.
People can own pieces of 100 commercial properties around the world. Plus you could invest in a few hundred dollars and get involved in New York City real estate.
Could you imagine a future where parcels of land are sold digitally? You could spend thousands on a lot of space and never actually go there.
Almost like those in the past that have sold acres of land on the moon, but instead of a digital record you get a paper one. Thats where people will get a little iffy on the subject of owning a digital copy of an actual physical object.
I could claim to own thousands of dollars worth of silver and sell tokens worth one ounce each to people hidden behind a website. But if those people were smart..... If.... they would want proof of the capital and the ability to trade their tokens in for the physical product.
I see a lot of items in the future going digital, especially monatery valued items/services. But i don't know about fairly large physical assets.
@ Dark
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Most assets are already digitalized, you must mean putting records of real assets on the blockchain. The only time I get physical share certificates is when I participate in an ICO or secondary offering. Most money doesn't actually exist in physical form, a single bank branch can have billions on the books but less than a few hundred thousand in cash. The derivates market is entirely digitalized and the vast majority underlying assets never actually changes hands. Has anyone ever claimed the hogs their futures represent?
You're right though, soon most records will only exist digitally. The world has already changed drastically and digitalization is nothing new. The stock markets and trading is mostly digital. I've never called my broker to place a simple buy/sell stop/limit order and never will.
Even consumable assets like energy and content will participate which will provide a great way to promote the tokenized world coming to our doorsteps!
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I'm not sure why you want a tokenized world? Are you talking about prosperity for all? Is it about a balance between rich and poor? What would you do with the many millions, could you dispose of them? Or do you suspect that virtual wealth would affect the physical world less than it does at the moment? Is there any hope that the trillions that make up the flow of money would only increase the digital world and reduce the longing for real matter?
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