The Central banks have historically controlled appalling portions of the population’s wealth. The very institution that people have elected to describe the path of their own money. The same path that mostly wound up to them, often getting corrupt and ending up with the devaluation of a citizen’s properties; through erroneous fiscal policies. A large part of Africa, and Venezuela have borne the brunt of such corrupt governance leading to indescribable miseries.
The point, however, remains what this has got to do with asset classes or their accessibility for that matter.
Major asset classes are
- Commodity, and
Focussing on the average investor stratum of the world, we can easily conclude that the high yielding among the first two classes is way out of reach for the common. The affordable ones are a bet most wouldn’t risk their fortunes on. Those that would mainly target the third, fourth, and fifth options. We have already discussed the fifth is subject to the mercy aka quality of Central Bank policy-ing. It’s also worth noting that if investments do not beat cash, they have defeated their purpose; as investments are for money to grow and build society. And hence is any day at the risk of turning into stacks of paper. Venezuelans watched their currency notes decline in value lower than the origami made out of them. Thus leaving the major bulk of the global population to invest in the property or commodity.
Rising Costs and Asset Owning Difficulties
Commodity circumscribes valuable metals like gold, silver, and also food grains. Valuable metals incur the expense of storage. Security within a bank’s locker incurring an annual charge is essential to prevent the robbing of such items. Commodities such as food grains are for consumption, and may of course be traded for cash. Cattle raising or dairy farming is an investment incurring expense and yielding mediocre gains with dairy products also being perishable.
Property as in real estate is gradually slipping out of bounds for the common too. The rising demand and price of land are pushing commoners further away from ownership dreams. A large section of the city population resorts to homes-on-rent or opt for share-in living.
Thus, the glaring inequality in wealth distribution leaves the average investors with very few avenues to invest in other than cash in the bank; coming with charges and nominal interest rates. We take a dive into how blockchain and crypto turn out major asset class accessibility enablers.
Crypto Disruption in Asset Class Accessibility
Bitcoin and cryptocurrencies as a whole have the power to offer a parallel monetary system that is beyond the governance of any single body. Being decentralized and permissionless and beyond the scope of any government to regulate it offers free entry for any individual to purchase, hold and transact it.
There are sufficient stories that stand for how bitcoin lifted people out of the vicious circle of unemployment and poverty. Bitcoin yields helped save countless homes, families, and children.
Remittance is yet another department where bitcoin posits a fairer and instantaneous alternative compared to legacy systems. So much so those nations significantly dependent on remittance funds are considering adopting bitcoin as a legal tender. El Salvador has already accomplished the feat placing itself as a first in the adoption of bitcoin as a legal tender.
Blockchain Disruption in Asset Class Accessibility
Blockchain helps in the tokenization of assets. Tokenization covers stocks, bonds, real estate, art, or commodities- all tradable items on an exchange. They are also valuable investment options for the unit value they represent.
Tokenization is the fragmentation of any object of value into smaller bits that may be virtually owned and traded on a digital assets exchange. This fragmentation of value translating to fragmentation of ownership is what tokenization stands for.
This implies that an expensive real estate property may now be split into fragments that should be within reach for average investors to afford and derive proportional yields from. This blockchain and digital assets essentially serve to pull down the barriers of entry into other investment avenues; inching closer to asset class accessibility across the global financial landscape.
To Wind Up
Clearly, blockchain and cryptocurrency pose a potential investment class and a demonstrated medium of exchange. And it possesses disruptive utility across industries. From the social angle, as we captured in this article, it strongly wields the potential to lower barriers to entry for all investment instruments by means of tokenization of shares and bonds, real estate, and commodities to be tradeable on a digital asset exchange