We are moving closer to the day when Hive will have the infrastructure required to create some innovative shift in financial and the markets.
It all starts with smart contract ability. This is what allows for the process of tokenization, something that is going to be crucial going forward. At the same time, exchanges are also important so that markets can form around the assets that are created.
One of the major benefits to Web 3.0 is the removal of intermediaries, reducing costs in most instances. When we look at the money associated with taking a company public, it is, for the most part, enormous. This is why there are only a few thousand companies listed of all the millions in existence.
Why don't we open up the markets to everyone?
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Creating A Hyper-Localized "Stock" Market
How would you like to invest in your local grocery store? Or perhaps you feel the corner bicycle shop is a good business? A farm on the outskirts of town?
At present, outside of a private offering, these are excluded. There is no way these entities could take themselves public. Even on the low side, it is going to run hundreds of thousands of dollars. It is more likely to cost millions and even then, not much is gained.
Tokenization can change all this. We know the ability to buy a token related to a restaurant is the same as buying Bitcoin. As long as there is the ability to swap, the transaction can be completed.
Naturally, these are not necessarily stock since it might not carry the same rights. However, it could be a way to usher in the concept of a DAO, applying it to real world assets.
All of this ties into the process of pushing things further out to the edge. We most commonly discuss this with technology and compute. Chatbots are an example of how some of that capability is more further away from the center.
With tokenization, we are applying the same principle yet focusing in the financial realm.
Of course, in most countries the securities laws would have to change, something that we can expect to be resisted.
Technology Usurping Governments
One of my overriding theories is that our present government system is woefully equipped to deal with the age we are in. The idea of governance based upon geographic region is pretty foolish in light of what took place the last 80 years.
To start, we had globalization to a degree never seen before. Companies no longer operate in a single country. In fact, there are times it actually employs more people outside the country it is headquartered (and achieves more sales).
The second major change was the shift to digitization, specifically the Internet and all that comes with it. Again, people are selling to and interacting with people all over the world. Cryptocurrency adds another layer because we now have digital assets that are not tied to any nation. In fact, they do not have any geographic ties.
This means we are dealing with assets that are completely in the digital world. There are also entities, i.e. businesses that are the same. They have no physical locations yet governments want to claim dominion over them.
Here is where the establishment of financial services of this nature expand past governments. The idea of banning Bitcoin is absurd at this point. For this reason, in my view, the move is to control it by having Wall Street take over.
Nevertheless, this is an isolated case.
The ability to do that to the entire digital asset space is impossible. Open source software means that more DEX can be spun up. The key is the development of protocols. Once these are released, it is game over.
A prime example is the EVMs. Ethereum has different token protocols such as ERC-20 which can be used by anyone. These are duplicated on the EVMs. These can be picked up via different DEX, providing the opportunity to trade, even if not direct.
What happens when this is repeated on a number of different networks? On Hive, we know of a few of smart contract platforms in development. This is fanning out similar to the EVMs.
Governments Overwhelmed
A localized business obviously has an issue since there is a physical location, providing jurisdiction. Here is where the laws are working against this concept.
However, we can presume, at this moment, the tokenizing of a pizza shop is not high on the SEC's priority list. The key is to keep it that way.
Here is where system overload enters.
We often discuss the idea of exponential growth. When people are intent on doing something, governments cannot stop it. At this point, it becomes simple math.
Governments are overwhelmed. The numbers are against them.
It is like the debate in the United States regarding cannabis. What a stupid issue? If an estimated 90% of the country has tried marijuana, why even have it illegal? Going one step further, it is impossible for the government to arrest everyone who is dealing an ounce here and there.
Hence, the solution is to try and make an example out of a few high profile cases and scare the rest. When it comes to digital assets, the numbers could get overwhelming. Imagine a time when millions of businesses are tokenized. Who does Gary Gensler go after then?
History is repeating itself.
Do you remember the Napster situation? People were being sued for thousands of dollars. What happened? There were a few cases that made headlines but, for the most part, technology changed everything. Today, more than 20 years later, music is everywhere.
The government and its laws were of no assistance.
We are going to see the same thing. When tens of millions of people in the United States, as an example, are regularly using and involved with digital assets, what is the government going to do? Are they going to be able to stop it especially when the technology allows people to interact without the centralized entities the government controls?
The answer becomes clear.
All of this opens the door for the tokenization of local businesses. The laws will change simply because the prohibition isn't working. We saw this with the U.S and alcohol (something repeated with cannabis). In the end, it is all about money.
The difference is that, with digital assets, we are literally talking about money. Our present financial system is so exclusionary that the masses are ripe for an alternative.
We can work towards a time where any company, no matter what the size, can be tokenized. This would allow people from anywhere in the world to invest in it. Of course, the appeal might only extend to those in the local region.
Essentially, we are looking to bring the Internet to finance. Commerce saw this in the sense where anyone, no matter where he or she is geographically located, can set up a website. Through that, products could be sold to purchasers on a global scale.
This idea is simply moving it to finance. We are repeating what the Internet did for commerce.
As millions of retail businesses found out, when the Internet arrives at your door, devastation can happen.