We often discuss topics that are not of great interest to most. However, a lot of this stuff is vital to the plumbing of the global economic system. If we are going to replace the present system, we should be aware of how it works.
Everyone wants things to grow and expand. This appears to be a part of human nature. Regardless of where society stands, it always moves forward. That means innovation, experimentation, and development.
Some might claim they do not fit into this category but that is usually not the case. If you ask the majority of people if they would like to be making less money in a decade than they are today, few would answer in the affirmative.
At the same time, people like to have access to new medical treatments that save lives. They want new programs to watch. Some prefer the world to shift to entirely new energy sources.
The list can go on. The main point is all of this takes money. For this to happen, funding is required. Without that, economic productivity stalls. Thus, monetary expansion does not mirror growth. Instead, it is what drives it, providing the resources and abilities exist to expand.
That said, at the foundation of this is a rather uninteresting concept: collateral.
Here is the multi-trillion opportunity for cryptocurrency.
The Killer DApp
JP Morgan understands the potential of cryptocurrency as it relates to traditional finance (TradFi). It believes the opportunity is enormous, one that will grow the financial realm by orders of magnitude.
“We think that tokenization is a killer app for traditional finance,” Lobban told CoinDesk. “If you think about private markets – private credit, private equity and private real estate – they are pretty much double the size of public markets, but many orders of magnitude less liquid, so there’s this huge disparity."
The bank has already done over $700 billion in transactions on its propriety chain, a permissioned version of Ethereum which trades tokens denoting U.S. Treasuries. This is an outfit that grasps the potential.
We are looking at hundreds of trillions in assets potentially being tokenized.
If that is the killer app for TradFi, what is the killer DApp for decentralized finance (DeFi)? I would say it is collateralization.
The ability to create assets that can be used as collateral is vital. Consider the market potential that exists.
Global real estate, as an example, is estimated to be over $300 trillion.
Hive Bonds
Why did we outline the concept of Hive Bonds?
The idea here is simple: liquidity. This is the essential piece for collateralization. Like the above quote, tokenization can make an asset class liquid. It is a concept that is vital to lenders as they want to know they can get their money if they end up with the assets.
HBD is a currency. People have the option of placing it into savings. This generates a return which has a steady stream of payments. Here we have a financial asset that has even more utility if tokenized.
A Hive Bond would tokenize the transaction, i.e. the HBD in savings along with the payments received. When tied to a time vault, this would create a bond similar to any other that exists.
What we have is full transparency without a financial institution offering counterparty risk. The other side of the asset is the blockchain.
Once the asset is tokenized, we have collateral. This is what allows for economic expansion.
Consider the amount of development that could take place if a project team decides to put $50K into savings, earn 20%, plus take the bond and get a loan for, say, $35,000. This could pay the development costs while paying back the loan out of interest.
Now picture this process getting into the hundreds of millions of dollars. Most people consider debt to be a bad things since most focus upon non-productive debt such as credit cards. However, when we consider a company financing the construction of a new factory to produce a new product line, we do not give it a second thought.
This is the essence of "good vs bad" debt.
With cryptocurrency, we not only have the ability to create our own currency, we can also produce new forms of collateral.
The ability to create collateral from by tokenizing assets which then can be used for loans that are focused upon expanding economic productivity is a powerful way to grow the cryptocurrency economy.
This is the future of cryptocurrency. The only question is who will focus upon this.
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I am grateful for my HBD. Cryptocurrency is such a complex realm tho!!!
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I know the tokenization and fractional shares will become the norm in the future when investing in the stock market, for example.
Yeah, you speak beautifully - but where is Hive here ???
I keep a really close eye in the real world asset collateralization like https://www.credefi.finance/ and i also remember projects trying to tokenize real estates i liked the idea but never saw much progress
There's much potential in tokenisation of public markets with the help of cryptocurrency. Funding will be a lot easier and accessible. Hive bonds will be a game changer, faster growth for the ecosystem in general.
Imagine if owning a house was as simple as buying an NFT off the marketplace. Then I might actually consider home ownership.
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Forgive me if I don't hold my breath.
"Regardless of where society stands, it always moves forward. That means innovation, experimentation, and development."
Oh...am not so certain of this.
I've lived in the South where it seems people fight change and PREFER to live in the past. I look at our present government and it's efforts to return to the social scheme of the fifties (and prior) when women were chattel and everyone else "knew their place".
Even dealing with cryptocurrency appears to have united the US government as a foe. Platforms like Nexo and BlockFi have been bitch-slapped into compliance by the SEC, even to the point where once-thriving BlockFi is now dealing with bankruptcy.
And there has been talk of the proposed federal CBDC, which will oversee and control common citizen finance. This last might be examples of "innovation, experimentation, and development", but not in the best interests of the average citizen.