The Tokenization of Everything

Tokenization is the issuance of blockchain tokens to represent tradable assets. These can be either fungible or non-fungible assets. A non-fungible asset is one-of-a-kind and cannot be replaced. A fungible asset can be traded one for another of equal value. For example, there are many Bitcoin of the same value that can be traded one for another. Bitcoin is a fungible asset. The Mona Lisa is an example of a non-fungible asset. Tokenized assets include real estate, commodities, futures, stocks, private equity, art, and much more.

Tokenization will allow any type of community - businesses, investors, or any interested party - to interact with each other in real time from anywhere in the world and without a centralized authority. This is highly disruptive to the current asset market.

The Tokenization of Everything will have profound effects on many market sectors, but with particular and considerable impact on the financial industry. We are currently witnessing the emergence and evolution of Decentralized Finance, or DeFi. This is now one of the largest use-cases for blockchain and has the great potential to fundamentally change the contemporary financial system as we know it. DeFi exists on an open-source public blockchain, of which there are many inherent benefits. There is no need for a centralized financial institutions or instruments, such as banks or brokerages. Transactions are recorded on a public ledger, which is both transparent and immutable. Transactions in DeFi are faster and much less expensive than traditional means. Taking place on the internet, with often no need for participants to divulge extensive private records, access to DeFi is convenient and affordable. Assets may be broken into smaller and smaller pieces, or fractionalized, which allows investors to sell off partial shares. The illiquidity of conventional assets, like securities and real estate, make them difficult to trade on different markets. Tokenization of assets offers issuers access to liquidity, and investors strategic flexibility with consideration to the scarcity of a given asset. The positive attributes are many and they are each uniquely profound.

It is my opinion that DeFi will completely destabilize the current financial landscape. This is a necessary step in the evolution of markets in this developing global ecosystem. The DeFi space is developing fast, and we will soon wonder how it ever worked on the current system. DeFi is to smart phones, what the current system is to outdated rotary phones running on a landline.

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