• The demand for tokenizing assets like real estate is a symptom of the problems caused by bad money.
• Tokenizing assets will drive prices higher and make it harder for average citizens to own a home.
• Bitcoin adoption offers a better solution as it serves as an actual store of value, draining the monetary premium from real estate.
The Problem with 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.
Effects on Homeownership
Blockworks 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, driven up by 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 and thereby putting owning a home further out of reach for average citizens.
Furthermore, blockchain technology does not provide meaningful links to the real world which would allow native contract enforcement and prevent rug pulls on these token holders. The system ultimately relies upon legacy law enforcement and judicial systems to uphold property rights — something which appears increasingly hostile towards cryptocurrency investors.
Bitcoin Offers A Better Solution
Bitcoin adoption offers fundamentally different solutions from asset tokenization, seeking instead to fix underlying issues with fiat currency which drive people towards such options in the first place. By serving as an actual store of value, bitcoin will drain away much-needed liquidity from markets; under this system housing prices would collapse back down closer to their utility values instead of being used solely as stores of wealth.
Tokenizing assets is not an effective solution for fixing wealth inequality; it only makes things worse by driving up housing prices even further out of reach for average citizens. Bitcoin presents us with an alternative approach which could help restore some much-needed balance back into our economy and allow people access once again to affordable housing opportunities