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👀 BCG: "This crypto sector will 26x"

👀 BCG: "This crypto sector will 26x"

PLUS: Congress slams SEC

Alex M.
September 28, 2023

GM everyone. This is 2036, the crypto newsletter that pays you.

Here’s what we’re serving up today 🍲:

Last week, 175 Pokémon cards were put on a blockchain - and sold out in seconds. A Congressman brought it up in a hearing yesterday. And Larry Fink, the CEO of Blackrock, called it the biggest opportunity in finance. WTH is going on?

Let’s dig in.

🥔 Today’s meat and potatoes

Get smarter on crypto in 2 minutes

There are ∼$500 TRILLION of assets in the entire world.

Yet crypto represents just 0.2% of that - $1 trillion.

But that’s changing - fast.

An unexpected use of crypto has emerged: stablecoins.

Real-world dollars are held in a bank account. Each of these dollars gets its own token. That’s a stablecoin.

Most people think crypto has no real-world use cases outside of gambling on magic internet money and pictures of monkeys.

But in 2022, stablecoins settled more than $11 TRILLION of transactions.

That’s:

The same as Visa
Double that of Mastercard
10X that of Paypal

Let that sink in.

But dollars are just the first step in the tokenization of real-world assets.

Some companies are starting to tokenize assets like:

stocks
bonds
real estate
commodities (gold, silver, etc.)
art

… which means their ownership is issued in the form of tokens on a blockchain.

That’s why Michael Saylor calls crypto “a black hole that sucks in everything.”

Eventually, all assets will likely be tokenized on-chain.

Imagine you want to own a piece of the Mona Lisa. That’s (mostly) impossible today.

But if you were to tokenize the Mona Lisa and record the ownership of it on a blockchain, you could own a fraction of it.

“Okay, Alex, but you can already own fractional shares in assets today.”

Yes - but putting them on a blockchain:

cuts out expensive middlemen
allows anyone, anywhere, to tokenize assets - not just wealthy people in rich countries
enhances the transparency of prior transactions and ownership history (like with NFTs today)
makes fractional ownership accessible to anyone with a wallet - anywhere in the world

That’s why Larry Fink, the CEO of Blackrock, has called tokenization the biggest opportunity in finance.

And the Boston Consulting Group thinks it could be a $16 Trillion industry by 2030 alone.

Balaji Srinivasan thinks it’ll go much further than that. Ultimately, he thinks we’ll tokenize cities and even countries:

Digital wallets mean that in the future, every asset will compete against every other asset (CBDCs, bonds, NFTs, video game potions, etc.)

And when every asset becomes liquid and can be exchanged against another, you won't need to convert into fiat anymore.

Cities will be competing for citizens. City coins are the new municipal equity. Are people long, short? City value will be determined by coins.

This creates incentives for city managers to manage quantitative data: do more people subscribe, share in the prosperity, buy a piece of property, etc.

What if people bought a stake in the entire community/city rather than in a local house when they move somewhere?

Truth is - we’re still figuring out the basics.

Yesterday, Congressman Torres asked the chairman of the SEC whether tokenized Pokémon cards were securities (and we didn’t really get an answer).

But the future looks bright for real-world assets.

Over the next months, we’ll be monitoring the best ways to invest in the trend.

For now, some of the more popular real-world asset protocols include: