We are seeing a major paradigm shift. There are a lot of things that are taken for granted, especially by those in the developed countries. When looking at the global landscape, we see how 80% live as compared to the 20%.
This is where cryptocurrency and blockchain can really make a difference.
While cryptocurrency gets all the attention, and for valid reason, we cannot overlook the impact of blockchain. Not only is it the base for crypto, it offers many other life changing options.
Understanding the power of a decentralized, immutable database is profound. When it is coupled with the concept of property rights, we can see how transformative this is about to become.
With that in mind, we have to point out that 80% of the world resides where basic property rights do not really exist. This places a tremendous financial burden upon those economies.
In this article we will detail how blockchain can put "the capital back into capitalism".
This discussion with the fact that in cities such as Cairo or Lima, an overwhelming majority of the homes are extralegal. What this means is they were build outside the legal codes. There is not the proper permitting or documentation of ownership.
What this means is that, while these places have value, they cannot be turned into capital. Instead, they are simply bought and sold as any other asset yet nothing more can be done.
This is really an economic headwind for these countries. Many think the problem with these poorer nations is they have no money. This is not the case. There is a lot of economic activity and people are very resourceful. The entrepreneurial spirit is alive whereby many develop thriving businesses.
Unfortunately, these too are also ineligible for capitalization. Instead, they operate without any form of corporate entity, making it outside the bounds of the financial system.
As much as some want to romanticize cash, the reality is that it is rather inefficient for economic growth. At the same time, while the banking system could be seen as a bunch of vultures, they do provide a needed service.
In short, without access to capital, economies flounder.
Many believe capital is money. Actually it is much larger than that.
Capital is a concept, a mental construct. It is the taking of something real and turning it into something different.
A house, for example, is a building. Nothing more. Capital is when we turn this into a means of new production.
When the house is used as collateral for a loan that is going to expand one's restaurant, that is capital. The same is true a company that sells it receivables to get money to bring a new line to market.
Essentially, it is capital that is the creator of new production.
In most of the developed world, we take this for granted. There are systems in place whereby one can turn assets into capital. We also have documentation of who owns the asset to begin with.
In other words, all of this is tied to property rights.
Property can be thought of as an economic concept the represents value above the asset itself.
By thinking of the house in this manner, one is looking to generate surplus value from it.
This is missing in most of the world. If one has a home in Lima which is extralegal, there is no way to access the value other than to sell it. The obvious challenge here is that the replacement would likely eat up all the money from the transaction. Hence, the ability to generate value from it above the physical structure is basically non-existent.
Of course, property rights in the developed world grew over hundreds of years. There were many laws put into place that brought us to where we were today. Jurisdiction disputes often had to be settled along with streamlining the process. There is really no one single moment or act that gave people "property rights".
This is what makes it difficult to establish.
Blockchain is something that changes all of this. While it is not likely we will see the homes represented in this fashion, we are seeing a shift taking place immediately.
It is often overlooked how cryptocurrency in one's wallet is true ownership. This fact cannot be understated.
We often say "not your keys, not your crypto". What this is really referring to is property rights. The blockchain tells us who exactly has right to the property (crypto). It is on-chain for all to see. The only variable is who has the key to access that wallet.
Here is where immediate and immutable property rights reside. There is no dispute. That is what made the situation with Craig Wright so laughable. If he was indeed Satoshi, simply access the wallet. That tells us he was at least in contract with the anonymous Bitcoin creator.
When a Splinterland card is delivered to someone's wallet, we do not dispute where it resides. Therefore, the holder of the key can access the value of that card. In addition to selling it, the individual can use it in the game, rent it out, or, if there was a platform, leverage it for a loan.
This is possible because there is no disputing who has the rights to that NFTs. Any transaction pertaining to it will be directed to that wallet. The blockchain doesn't care who owns it. Instead, it is only concerned about matching the new value generated with where the asset is located.
Basically, we are looking at full documentation of ownership via the blockchain. The network knows at all times where each asset is located. There is no dispute.
By accessing capital, wealth can be generated.
This is something that is missing in much of the world. Property rights do not exist in many countries. If there is some system in place, the bureaucracy required to, say, register a business makes it unrealistic for most. This presents a challenge.
It is easy to see how blockchain alters this instantly. As lending platforms are built out, people can access the value in the asset they are holding. These resources can then be used to create more economic output. Over time, this can provide a greater return, not only individually but collectively.
Within the cryptocurrency realm, this is a concept that is often overlooked. However, we need to understand how transformative this is. While most discuss the "unbanked", we see an even more powerful concept provided by blockchain.
As property rights expand throughout the world due to this technology, we are going to see even more wealth generated. Of course, the ones who are apt to benefit the most are those who are presently living under conditions where they are non-existent.
A simple digital representation on-chain can make a profound difference.
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