Yes you read that correctly: Hundreds of Trillions.
The world of crypto-economics is about to explode. We know the purveyors of FUD do not want us to believe it. This is why the orchestrated attacks on cryptocurrencies since the start of the year. We are a part of something that is an enormous threat to the elite and the power they wield.
Thus far, they did a terrific job beating the masses into submission. Looking at the prices of the crypto world, it is obvious the FUD scared people off. Yet it is a mirage. These people know what is going on and that the more people in crypto, the more the elite loses power.
So we see the long list of people paraded out saying that cryptocurrency is a fraud, is going to zero, and will never be worth anything.
What is funny about all of this is we are about to see hundreds of trillions of dollars dumped into crypto tokens. The mantra they are espousing is not going to last much longer.
In the past, I wrote about the true market mover in the world of crypto. It is not currency tokens like Bitcoin nor the utility tokens. These are going to be big in my opinion yet will only amount to about $10T-$20T. There is something much larger than these categories.
A deal was just announced that is going to really kickstart the introduction of security tokens. Specifically, Airswap cut a deal to tokenize the New York City real estate market. Just how big is this market?
According to the city, it is $1.26T as of July 2017.
The deal was cut with Propellr, a FINRA-registered broker-dealer, to enable people to create and trade tokens that adhere to the securities laws. This means that any real estate property in New York City can be tokenized and traded on the open market.
Ever have an inclination to own some Manhattan property but lack the funds? Soon, one will be able to take a nominal amount and buy a piece of the Manhattan skyline.
Real estate is notoriously non-liquid and slow to move. Anyone who tried to sell a house knows this. Tokenization allows for a secondary market to emerge which allows transactions with a lot less friction. Anyone who tried to liquidate a partnership agreement in a commercial property knows what a costly nightmare that is. With tokens, it is a easy as selling a share of stock.
This is one of the primary ways we are seeing crypto-economic systems start to penetrate the global asset class. New York real estate is just $1.25T of a much larger pie. This does not include Tokyo, Hong Kong, San Francisco, London, or Paris. All told, there are hundreds of trillions of dollars worth of real estate throughout the world.
Do not think for a second that most of it will not end up tokenized over the next decade.
At the same time, this is just one of many initiative to tokenize non-liquid assets. Recently, an Andy Warhol painting was tokenized with individuals buying a piece of the painting by acquiring the tokens.
Another factor is tokenization as it pertains to the income statement. I have yet to see a name for them so let us call them "Income" tokens. Using the Manhattan real estate, let us say we sell tokens to a particular commercial building. This token could represent the equity in the building. As the price of the asset rises or falls, the tokens could mirror that. However, there is nothing that says the token applies to what takes place inside the building.
Commercial properties have tenets. To keep them happy, security is provided along with cleaning people. Maintenance is done on the building while taxes are paid. Common areas are lit with public restrooms stocked. In short, the rent paid by the tenets is offset by the expenses incurred.
Using the same property, another set of tokens can be issued against the profit/loss of the building. If vacancies increase, the token could decease in value even if the security token is going up due to the overall market. Either way, both tokens are freely traded on exchanges allowing people to participate in a market they would otherwise be excluded form.
This is something you do not hear mentioned on CNBC but it is coming. The fact that the partnership includes a registered securities agent means that the SEC will not step in. A great deal of the focus upon this industry is because ICOs are considered securities in the U.S. and those selling them are not registered.
Going through registered agents does not surprise me. I expected this would be the first step. It is going to be a gradual process before we see Wall Street excluded from the process. It will happen. There will come a time when all the tokens issued with be on decentralized exchanges that are outside the jurisdiction of any one regulator. In the meantime, Wall Street will get their hands into it driving up costs more than they should. Ultimately, people will find out that they can do the same thing without Wall Street.
To get an idea about how something like this is structured, click on this link.
https://medium.com/fluidity/airswap-technology-and-a-new-model-for-tokenized-securities-7f347818b574
Moving past this, we are going to see an enormous pool of wealth unleashed. Anyone who studied the velocity of money knows the impact it can have on an economic system. Turning hundreds of trillions of dollars loose on the open market is wealth that is presently tied up. This is going to create enormous impact.
This is all a part of the Age of Abundance. The present path is creating more inequality. Fortunately, crypto-economics is going to be the system that takes over. This development of the security token shows how average people could profit from asset classes once only reserved for the elite. Whereas the few were profiting before, now the masses can also partake.
It is the power that we have before us. This is why the FUD is so ridiculous. With hundreds of trillions of dollars created in tokens, what do you think will happen to the price of the utility tokens as more people embrace crypto-economics? Personally, I believe the movement towards mainstream will increase the price.
Prepare yourself. We are going to see obscene amounts of money enter the crypto space. In addition to real estate, you will see art, partnership agreements, and intellectual property all be tokenized.
It sure is nice to be in here already.
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