Crypto is tokenizing the world (Your house will be tokens!)

Chuck E. Cheese tokens

Tokens are an interesting phenomenon brought on by the development of smart contracts on the blockchain. Many startups have opted to ICO, raising funds in the form of cryptocurrencies rather than raising dollars from angel investors or venture capital. They’ve done this because its far easier in that they don’t have to follow legal regulation, and because its easy to get rich quick as speculator demand for risky investments is high. You don’t even need to have a good idea or product to have your token highly valued and traded (see Spankcoin, Dentacoin). As time goes on I think we will see more token offerings for hardware projects (like Kickstarter) and non-blockchain related businesses. I believe that in the future, many apps and virtual economies will implement token offerings, whether it is in the form of their own virtual currency, rewards program, or shares in their business.

Tokens make everything more liquid

Tokens on the blockchain have the same benefits that cryptocurrencies offer; quick/easy to move around, privacy, and security. But the most significant social implication is the ability to create liquid markets for previously illiquid assets. Think about rewards points offered by a business, where if you had them, it would not be possible to sell them, or even transfer them to a friend. With tokens, this becomes possible. The benefits a business gets from using these vs an in-house solution is the cost savings of not having to invest in security, infrastructure, support, etc. for their managing users and points.

Moving physical assets to Cryptoassets

Own shares in a specific house or car, with the ability to trade them like stocks

Imagine having a smart contract represent the title of a house. Share ownership in that property can then be represented by tokens, allowing people to invest in specific buildings or assets like paintings, cars, etc. This opens up a lot of interesting investment possibilities and completely changes the way securities are owned and traded. The missing piece for crypto assets right now isn’t the technology, it is the legal frameworks needed to properly define ownership and linkage of a real world asset to a smart contract. After all, what happens if tokens representing your house get stolen? This will take time and legal precedent to figure out.

How to financially benefit from tokenization

If you think tokens are the future like I do, invest in platforms that have smart contract / token capabilities. Right now, the most significant platform in this space is Ethereum, which has captured an amazing 90% of global token market value.

People will also need a way to trade and exchange those tokens. For that, 0x protocol seems like a very promising project, allowing traders to trustlessly swap tokens without the need of an intermediary to hold and broker. (Disclaimer: I hold positions in both Ethereum and 0x.)