From Crypto Crash to Tokenization Triumph: Envisioning a Blockchain-powered Future

Crypto and web3 are finally having the reckoning pragmatists had always anticipated. The crash is a combination of the unraveling of a bunch of bad actors, flawed business models and regulatory pressure.

We've lived through wild speculative times like this before. Going as far back as the tulip craze of the late 17th century to the dot com boom/bust at the turn of the last century it is always inevitable. A disruptive technology gets people all stirred up which leads to speculation, over investment and then the subsequent crash. It's like clockwork and we're seeing in crypto and web3 is no different than before.

While I may sound cynical, I do think there are some really interesting use cases that will transcend this crazy speculative time and it's going to be the merging of the digital with the physical. Just as with almost every other technological bubble before it, the post-crash cycle ends up being significantly larger than the hype that preceded it. I firmly believe the technologies that will prevail are around the blockchain public ledger tied to NFTs representing a digital layer across the physical world.

It's the tokenization of the physical world that is going to happen and be significantly bigger than all of this craziness we've experienced in the first decade of web3.

In a recent research report, Bernstein agrees with me citing a massive opportunity:

NFTs have some interesting elements that enable things you couldn't easily do before. Specifically, NFTs will serve as the basis for a digital layer across the Internet representing physical assets. We have digital representations for things today for a variety of physical assets but most all of them are siloed away. Items are represented on eBay and Amazon all the time. These marketplaces facilitate transactions between buyers and sellers but it most cases those transactions happen and the digital representation or chain is lost.

With NFTs, you now have the ability to create a digital representation for a single physical item once-and-for-all. If you can then associate transactions of that physical asset with the digital counterpart, you now have a means of provenance. You can understand it's history and you can better track its authenticity. If you apply this to something like the collectibles market it is extremely powerful. Whether sports trading cards or fine art you could create a whole new asset class that is cross-platform and cross-Internet like never before. Doing this on a public, transparent blockchain means it is verifiable and less likely to be gamed by the aforementioned bad actors.

US banking watchdog Michael Hsu, the acting chief of the U.S. Office of the Comptroller of the Currency (OCC), thinks you can't do this on a public blockchain. We respectfully disagree. Open source software proved the idea of building sophisticated software and systems to support huge businesses. Finance is no different and this idea that it could be done centrally or by a large governing body has been proven wrong time and again. Who would oversee this regulated "blockchain"? The SEC? We're still having to file to EDGAR via XML files; no thank you.

Here at Jump, we have built exactly this. However, we haven't gone the traditional ready-fire-aim path that most web3 projects go. We have spent time building out not only the technology stack to build the digital representation of physical assets on the blockchain, we have also built out a sophisticated legal framework that allows people to own the assets and have them interact with the real-world. It has taken us over a year to build this infrastructure but we're confident that it will serve as the basis for the next iteration of compelling use cases for NFTs.

We're looking forward to some exciting developments that are just around the corner around our partnerships and regulatory work that we cannot wait to share.

We hope you join us in the land of tokenization in our post-crash crypto world.