Dear bankers and TradFi execs

Dear bankers and TradFi execs,

Look to your left. Look to your right.

Many of your employers won’t be here in a decade.

They’ll go bankrupt, get acquired, or perhaps… they’ll be one of the few that evolves rapidly enough to embrace tokenization and end up thriving.

Fink, of course, says everything will be tokenized. Us crypto natives have been saying the same for more than a decade now. We’ve been saying it so long, in fact, that it’s positively boring. It’s so utterly inevitable and clear as glass that it’s not really worth wasting breath on anymore.

We’ve moved on to far more interesting discussions.

Perhaps the most interesting at the moment is whether you’ll choose to tokenize your assets on public blockchains like Ethereum or permissioned chains managed by say a consortium of banks.

Honestly, I don’t envy you.

You’ll be forced to make this decision in what will feel like too short a time – especially for your execs who haven’t bothered to self-custody a single satoshi in their lives.

Good luck understanding and forming opinions on crypto if you haven’t used it…

In fact, if you’re reading this and you haven’t self-custodied crypto yet, I ain’t mad or in disbelief. I just feel sorry for you. You’re that once-fine-looking horse who’s now in the back of a trailer with chipped nails and yellow teeth as you bump down the road to the glue factory.

But that can’t be YOU, right? You’re a financial professional, after all. You literally get paid to be at the forefront of fintech…

So surely that means you’ve experienced the delicious nervousness of sending $100k over the internet in seconds via an irreversible transaction…

You’ve watched that same transaction get confirmed with wonder on a public blockchain explorer?

1 confirmation…

2 confirmations…

3 confirmations…

Surely, you’ve connected MetaMask and swapped on Uniswap?

Surely, you’ve borrowed money on Aave?

And, above all, I’m certain you’ve looked at a string of 12 or 24 words… or held a Ledger in your hand… and marveled at the fact that this is all that’s needed now… that this tiny thumb drive replaces what once required steel vaults, brick walls, armed guards and bankers to protect?

Of course, you have…

So, let’s get back to the question at hand: public chains or permissioned chains?

Here’s one clown’s vision:

Both approaches will be attempted. Permissioned chains will win in the near-term. Public chains will win in the long-run.

I say all this because

1) I’d recommend you simply skip the permissioned chains and accept the inevitable; and

2) I look at what’s happening in finance, and I don’t see a slow evolution… I see tokenization as the beginning of a moon race.

Icons will fall.

New titans will rise.

This is the moment, sers, where legends are made real…

It’s the story of Vanderbilts, Carnegies and Rockefellers all over again… of bold young humans who smell change, and don’t run from it or fight it, but lean so hard and aggressively into it that they birth new dynasties.

In fact, I think we already know some of the names that will dominate the next hundred years of finance… they’re names like Coinbase and Circle. And they’re names of the stalwarts who already see the writing on the wall… the BlackRocks and Fidelitys.

The rest aren’t simply in danger of falling behind. They’re in danger of extinction.

The advantages of tokenization are so great that our regulatory frameworks literally can’t handle them. We have to put on leather and degrade and violate crypto to even force it to accommodate archaic concepts like clearinghouses.

Crypto’s advantages aren’t 2 or 3x better than what exists today, they’re 100x. They’re printed newspapers vs. Twitter. They’re photographs vs. film.

They’re internet native in an internet age.

Anything else is dead.

And in the end, public blockchains are dramatically superior to gated permissioned chains.

Permissioned chains serve subsets of humanity. Public chains serve the world.

Permissioned chains win jurisdictions. Public chains win worlds.

A few execs will realize what’s happening, of course. They’ll be the sort to mandate that every single one of their employees do a swap on Uniswap, take out a loan on Aave and buy an NFT. They’ll hire some badass blockchain engineers to build this stuff out, and they’ll tokenize hundreds of billions of dollars every year for the next few decades.

They will print money and buy golden toilets.

Others will swirl like the 💩 in those bowls.

And when they finally realize it’s time to pivot, they’ll have such bad, antiquated reputations that they won’t even be able to hire reputable blockchain engineers. Then, they’ll get talked into running pilots on EOS 🤣

Eventually, they’ll wake and realize they failed their companies and their missions. They’ll realize that they weren’t in the industry for financial innovation… but for financial protectionism, for gatekeeping and status quo, for clinging to what’s worked for five generations (five generations btw that didn’t grow up w the internet).

Hopefully in the end, though, they’ll realize it wasn’t that the world changed and blindsided them (the world is always changing, after all), but rather that it was them who’d become afraid to change.

Sincerely,
☎️