Cryptocurrency got the imagination of many people.  We see a lot of speculation of what things will be worth.  

At this point, there is a lot of experimentation going on.  We are in the very early days of this technology.  How it eventually unfolds remains to be seen.

Many want to call cryptocurrencies a scam.  There is no doubt that people are using this realm to do shady, fraudulent stuff.  However, to call a large percentage of what is taking place a scam is simply wrong.  There are plenty of projects that are legitimate even if they do not work out.  Quite simply, the failure rate will be significant.  

Remember, 90% of all venture capital funds in Silicon Valley ends up as a total loss. 

The challenge that people have when looking at cryptocurrencies is that they are only looking at a small piece of the puzzle.  We see individuals allude to the $7T gold market, the $5T in daily forex exchanges, etc.  All of these have valid points.  Nevertheless, people are still looking at cryptocurrencies as money.  This is only a small piece of the equation.

Focusing on utility tokens means the biggest potential is missed.

There is one market that is worth $200T+ along with two others over $50T+ apiece.  In total, this is worth more than $300T...and much of it can be tokenized.

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Picture buying a building in downtown Los Angeles.  Getting a group of investors together means we establish some type of partnership.  It is not uncommon for General or Limited Partnership agreements to be created.  The challenge with this is they are not liquid assets.  Hence, we see an asset class worth hundreds of trillions of dollars that cannot be moved easily.

This is a problem because it carries a high transaction cost to sell.  Hence, there is a premium to hold a non-liquid asset.  Contrast this with buying/selling stock.  Stock in major companies is very liquid.  Of course, this asset class is not guaranteed.  There are many smaller stocks that have large spreads due to a lack of liquidity.  In other words, it costs more to transact in those assets.

Just using real estate, art, and limited partnerships, we see hundreds of trillions of dollars.

Enter security tokens.

Suddenly, we have the ability to take non-liquid assets and make them liquid.  With this approach, someone could own $100 worth of the Sears Tower.  Paintings by Picasso can be tokenized.  Even a large law firm could be tokenized with each partner having tokens to represent their ownership.

Cryptocurrency reduce the friction in transactions.  When you have an industry like real estate or art, you can really see how tokens remove the friction.  Just consider the time, effort, and cost one goes through to sell a piece of art.  Having it tokenized means that there will be a market instantly for it (as long as it is something people are interested in).

Security tokens are not only for assets.  We could use them to tokenize the future earning power.  For example, a basketball player coming out of college could create a token based upon his future earnings.  People (or institutions) could buy the token based upon their belief or confidence in the future cash flow of the athlete.  

A coffee farmer in South America could tokenize the upcoming growing season.  A token is created and sold in exchange for the revenues from the crop.  The farmer would use the funds to finance the plant, picking,and getting it all to market.  A good crop would mean a nice yield for the token holders while a poor yield means it was a bad investment. Either way, the farmer could use this as a hedge against the market (and weather) forces.

Finally, we can even operate this on a micro-scale.  Let us presume someone needs to renovate one's home.  Many people lack the money or resources to do this.  Again, we can issue a token that covers the cost of the remodeling.  The homeowner can pay the token holders the same way one does a second mortgage.  Again, these assets, the tokens, are liquid, where the owners can buy and sell them on the secondary market.

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There are 6B people in the world who are either unbank or underbanked.  Crptocurrencies allow them to be part of the global financial community.  However, tokens go far beyond just the ability to send, receive, and store money.  It also provides these areas with means of capitalization that are non-existent now. 

We are starting to see a number of projects starting to focus upon this market.  I am sure there will be many more that emerge over the next few years.  This is simply too big a market for people to ignore.

When you consider the possibilities, you can see how huge this is.  Vintage automobiles, rookie baseball cards, album covers, sculptors, and even those old Cabbage Patch dolls can all be tokenized.  Of course, just because something is tokenized, that does not mean anyone will want it.  That is what markets determine.

I cannot stress enough how early in the process we are.  Cryptocurrency is still in its infancy.  There are going to be tens of millions different projects showing up over the next decade in all areas.  Failure will take place in many instances for a variety of reasons.  However, there will be some that break through.  This is how technological development is.

One thing is clear to me, the combined value of money, assets, production, and revenue streams is in the hundreds of trillions, a large portion that could be tokenized.  Since a lot of this is "dead" money, it is possible that we see the power  of a great deal of this capital unleashed in the next 10 years.  

Exponential growth is going to come from many areas.  The world of finance is undergoing as much of a change as any industry.  Disruption is on hand.

If you found this article informative, please upvote and resteem it.

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