Tearing down the house of centralized finance

For the last couple decades, there has been somewhat of a trend in some countries where friends are pooling their resources in order to become real estate investors. I have a couple friends who have done this and now have a couple of rental apartments together, that slowly tick over to pay the mortgages. Part of the problem with real estate is of course, the initial outlay, as it is large and requires being able to get a loan. Even when friends pool resources, it isn't a game that everyone can play.

Yet.

The thing that is becoming increasingly possible through crypto is staking, but one of the problems is that there is somewhat of a disconnect between the staking return and any kind of reality of activity. It is pretty easy to just print more tokens, without needing to perform anything of value. It is pretty much like getting a dividend on a share, but the dividend is tied to some kind of company results.

But, the same mechanism can apply to pretty much anything and because of the way the blockchains like Hive can make micro transactions feeless, there is the possibility for investment into something like real estate at very, very low levels, with returns tied to performance (for example, rent income) that can pay a dividend and give an investor a share of the ownership of the building, without having to divide it along whole apartment ownership. This still gives the possibility for ownership decisions through a state-weighted voting process, as well as division of incurred costs using the same spilt.

This would give all kinds of people access into a far more stable investment vehicle by lowering the barrier of entry significantly, without having to know any other investor, nor needing a great deal of middleman management, especially on the accounting side of things.

The other benefit of this is that often, a building company needs to presell a certain amount of apartments before they can start building, but this can be a slow process as the first buyers will have to wait a long time to get into a place, making them not want to commit. However, taking share investment early on from a large pool of micro investors, would mean that the building could be started where they will own the rental apartments within that will attract the dividends, and other buyers can own an apartment outright. This would reduce the Time to Value of the building, as it would be completed sooner from start to completion. In this kind of setup, there could be an "early bird" discount, where those who buy in to get the project started could be able to sell their shares at a higher future price, as people buy near the "go live" date.

On top of this, it would allow for investment into markets that one wouldn't have access to normally. If you imagine that there is an "up and coming" suburb that is on the other side of the country or the world, investing into the potential of it is difficult, if not impossible for most people. However, using micro investments through blockchain and tokenized pooling, it would be possible for groups of investors to be a fragmented part of the building phase.

Of course, this doesn't have to be limited to real estate, it can help in all kinds of areas of investment, whether it be in the supporting of startups or charity work. In my opinion, there will come a time where all charity activities will be blockchained, as while it will allow for better accountability and less room for abuse of funds, it will be far more efficient. It is quite crazy that groups like the Red Cross spend so much on administration, when a lot of what they do, especially when getting value into the right hands, can be done through a mobile phone. Yes, there is still a lot of manual supply chain management needed, but cleaning up the money flows would allow for more resources to help where it is needed.

A lot of the value of the finanical world has been generated through middleman service fees and access to gateways. It has been this way as up until recently, they were pretty much the only ones who have been able to offer this service, either through technical capabilities or legislation. However, when a blockchain such as Hive becomes the middleman manager and doesn't require a cut of the value transferred, a lot of resources can be saved. Not only that, there is a far higher degree of accuracy.

Out of ~51,1 million blocks, how many transactions has the Hive blockchain made in error? Pretty sure we have been running above six sigma since day one - it would be interesting to know how many blockchains aren't running accurately. I think they just shut down the "production line" until 100% accuracy can be restored. It is 100% correct, or it is 100% not moving.

You can maybe see why there will be a lot of pushback against for example, a government having to have all transactions blockchained, as nothing can go "missing" without it being logged and traceable. Yes, the transaction contents could be masked, but it would raise questions for audit, even if that audit is done by a narrow group of specialists. Remember how the Pentagon can't account for something like 21 trillion dollars? If it had been blockchained...

Anyway, the point of this post isn't about the governance structure per se, it is about the potential to micro invest using tokenization on things in the real world, including vehicles where many people are unable to get a foot in the door because the initial barrier is too high. In time, blockchains and crypto will have to tie themselves far more heavily to real assets, whether it be something like real estate or business activity, in order to attract investment as well as stabilize their foundation.

Hive already binds itself in this way, where the assets are things like accounts, applications, communities and investment vehicles of various kinds and the activity is what we are doing here daily. Most blockchains have no relationship to reality at all, other than a whitepaper.

The world of finance is changing, not just because of DeFi, but also because we ourselves are changing through our ability to interact with each other globally, to see potential globally and, to be able to invest ourselves into global activity, without having to leave our home. The finance industry is set to be disrupted in a way that it has never been before, which is by we the people having the capabilities to no longer need those who guard the gateways of wealth today.

Should be fun.

Taraz [ Gen1: Hive ]