• The demand for tokenizing assets like real estate is a symptom of the problems caused by bad money.
• Tokenization of assets can lead to higher prices and further wealth inequality.
• Bitcoin provides a solution by acting as an actual store of value and draining the monetary premium from real estate.
The Demand for Tokenizing Assets
The demand for tokenizing assets like real estate is not a solution to, but rather a symptom of, the problems that bad money perpetuates. Real estate should be reduced to its utility value as a dwelling or place of business, rather than used as a store of value by proxy if we ever hope to solve the growing gap in wealth inequality.
Potential Side Effects
LinkedIn post, March 2023Blockworks highlighted this “advancement” in technology without properly addressing the potential side effects that widespread asset tokenization may cause. In the comments section, tokenization is touted as a means for individuals who are unable to purchase a home of their own to participate in the real estate market. But why are houses so expensive in the first place?Because they are being used as stores of value, a former function of fiat money that is no longer possible due to decades of fiscal and monetary alchemy that has decimated peoples’ purchasing power. Tokenizing assets like real estate will only make matters worse as crowds shove money into the market, driving prices higher. It becomes a self-fulfilling prophecy. People buy houses because they know the prices will go up, then the prices do go up and more demand comes in to chase the gains. Every investor following their individual incentives puts owning a home further out of reach for the average citizen. This is not a solution.
Furthermore, a “blockchain” is simply a ledger, or record of who owns what. With Ethereum especially, there is no meaningful link to the real world which would allow for native contract enforcement, preventing rug pulls of these token holders. The whole system ultimately relies upon legacy law enforcement and the judicial system to uphold the property rights of these investors — a system that appears to be increasingly hostile in enforcement actions against the crypto industry writ large
Bitcoin adoption is fundamentally different,