Few realize the power when it comes to the tokenization of everything.
This concept is going to become evident shortly. There is a good chance we start to see the major corporations entering the space. In fact, Raoul Pal is starting a company that is designed to help that advancement.
It is also likely to thrust cryptocurrency into the limelight and cast it in a completely different manner.
This is also what is going to determine Web 3.0 success versus failure.
With the bear market in full swing, many projects are being exposed for what they are. Throughout the evolution, the main focus was on tokenomics and how they could be toyed with for maximum appeal.
Few were concerned with utility and there was very little done to try in terms of building. Instead, the quick money was sought after.
The question is whether a project would be viable if there was no tokenization? How can a business succeed if there is no product or service being offered? With this frame of reference, it seems obvious. However, how often has we ignored this for something shiny?
A great story can garner attention but rarely is sustainable long term.
For the last couple years, tokenization hid a lot of bad projects. Certainly, starting a business is never easy. We know the success rate is low. That said, what we witnessed covered a lot of red flags.
Now we are at the time where people need to get serious. As the tide rolls out, we are seeing things exposed, warts and all. It is no wonder that many big name crypto projects are failing. They were not built upon strong foundations.
Unfortunately, this opened the door for existing corporations to enter the picture. Here is where people like Pal understand what is taking place.
Existing businesses are presented with an enormous opportunity via tokenization. It can add another layer to the existing models that are in place. Web 3.0 offers a huge benefit to these companies.
We can consider this the introduction of utility tokens. These are ones that apply to specific facets of a business, providing different features to the customers/users.
Many discussed this idea in the past but it never really took off. We might be close to the point where we can see this.
One obvious use case for tokens are in the form of loyalty programs. This is long a staple of many businesses, especially the airlines. The challenge is that we see very little in the way of a secondary market. With cryptocurrency, the tokens can be traded on permissionless blockchains, providing the greater value.
Of course, there is a benefit to corporations. Tokenization allows for marketing without dipping into the existing budget. Companies do not have to sell their tokens to generate a return. Instead, simply using them as part of a marketing strategy removes that funding from the budget.
This all is done with the goal of expanding the number of stakeholders. Loyal users are very valuable. While they get the benefits of the product or service, there is nothing else tied to their patronage. Tokenization will alter this completely.
Customer bases are communities. There is a common interest automatically since all like the same product or service.
Here is where Pal is looking to access.
How big is this?
According to Pal and his new venture, the market is $63 trillion. This is something that Science Magic Studios is looking to access.
ScienceMagic.Studios describes itself as “a digital asset venture studio” that advises and implements “the creation of digital assets (e.g., NFTs and social tokens) and web3 economies for brands, talent and their communities.”
We can conclude the goal here is to get some of the biggest names in the world into cryptocurrency. When that happens, the exposure of the industry will skyrocket.
Naturally, few will realize what is happening. Today, people do not give thought to the infrastructure that is in place when they go online. We will rapidly move to that point with cryptocurrency.
As major corporations offer tokens as rewards, the idea of community will expand. These companies have built in users, hence being able to distribute millions of tokens rapidly. When tied to discounts, promotions, or upgrades, value is instantly generated. The "social" layer will only increase this is the entity is very popular.
It is easy to imagine how this could play out with a film or television show. The companies behind these projects can further enhance the loyalty of their viewers by tying a token to other aspects of the enterprise.
[Social tokens] are a huge opportunity for them.
Thus far, cryptocurrency was basically start ups that built their model around tokenization. Even the ones that sought to provide legitimate goods or services were having to trudge along.
We are now embarking upon a completely reversal. The next phase of cryptocurrency could well be existing businesses integrating tokens into their model. They are not creating something from scratch. Instead, they are taking their existing customers and looking to capture the value of "community".
Here is where we can see the acceleration towards mass adoption. Fortunate 500 companies have customer bases that number into the millions. The introduction of a token by a company like Disney or MGM could bring millions into the space instantly.
It remains to be seen how quickly the gaming industry embraces cryptocurrency. This is an ideal alignment since their users are already involved with in-game currencies and assets.
One of the keys is going to be if these companies are willing to give up some control. By allowing things on the secondary market, that dilutes some of the power they wield. That said, corporations that head down this path will likely find it is far more profitable to do that in the long run.
Things are about to get very interesting within the world of cryptocurrency.
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