Merchants always exchange value for profit, thereby playing a beneficial role.
Written by: Blockworks
Translation: Bai Shui, Golden Finance
The deceit of business lies in speculation. Merchants always exchange value for profit, thus playing a beneficial role.
——Andrew Carnegie
When asked about the competitive threat posed by the newly established Federal Steel, Andrew Carnegie scoffed that the company's real expertise was in "manufacturing stock certificates" rather than steel.
This dismissive comment symbolizes the boom of industrial "trust" stocks in the 1990s, with Carnegie believing that these stocks were mostly unrelated to business and closely tied to speculation.
Of course, there are exceptions—the large monopoly trusts established in fields such as oil, sugar, and tobacco have proven to be good investments, as expected.
But there are also some trusts established in areas such as ropes, wallpaper, and coffins that are essentially just stock promotion schemes, not so.
In 1893, the collapse of the National Cordage Company (the "Cordage Trust") even triggered a widespread financial panic, leading to the failure of many other trusts engaged in the "manufacturing of stock certificates" business.
This result may serve as a warning for the cryptocurrency industry, as it is still known for creating tokens (rather than value).
The vast majority of tokens have no real use - and those that are truly useful mostly just represent different ways of trading useless tokens.
The cryptocurrency market remains highly self-referential, but there has been hope that this will change over time: establishing a new financial system will attract assets and investors.
If that's the case, it feels like they could arrive at any moment—current technology is mature enough, blockchain space is cheap and abundant, and the U.S. Securities and Exchange Commission (SEC) has also relaxed regulations.
There are signs that all of this may be happening, which is hopeful.
For example, the phenomenon of real-world assets being transferred on the chain has significantly increased—this is mainly attributed to the success of BlackRock's tokenized money market fund BUIDL (which truly outperforms its off-chain counterparts in many ways).
Stablecoin assets are also showing an upward trend, and it may just be getting started: Mastercard announced this morning that it will use stablecoins for payments, which could ultimately bring cryptocurrencies into the mainstream view of non-crypto users.
Citibank's recent report predicts that by 2030, the asset management scale of stablecoins will soar from the current 240 billion dollars to 3.5 trillion dollars.
(Note: I calculated that there are four and a half years left until 2030. I know this is shocking, but it is a fact.)
If on-chain tokenized assets reach 3.5 trillion dollars, then investable assets will also follow.
For example, I recently purchased two Pokémon cards and a bottle of whiskey on the blockchain, simply because I had some spare money on the chain, and cryptocurrency made it very easy to buy Pokémon cards and whiskey.
So convenient that I now consider both of these things to be investable assets—no need to receive or store collectibles like before, which has changed the game.
Investing in card games and whiskey is more interesting than earning 4% on BUIDL or losing 100% on memecoins.
I hope cryptocurrency investors will soon have more options.
Kyle Samani even believes that there will be more choices in the future: "Almost all assets will be traded on permissionless systems that are essentially global, like Solana," he predicted in a recent report on the future of the cryptocurrency capital markets.
If that's the case, it certainly includes stocks and bonds, but what's more interesting is that it also includes a brand new type of crypto-native asset.
For now, it's still hard to imagine what these futures will look like, apart from the current issuance of blockchain and DeFi tokens, which are almost all used for cryptocurrency transactions in a self-referential way.
But now that block space is so cheap and abundant, people are trying new things.
For example, Time.fun is an experiment that tokenizes people's time; Zora is an experiment that uses "content coins" to showcase and prioritize information; TRUMP, a "celebrity coin," is an experiment that tokenizes compensation; Story Protocol is an experiment for programmable, tokenized intellectual property; Believe App is an experiment that converts X posts into memecoins (or "creative coins"), which can fund the business ideas they represent.
Like most experiments, these experiments can fail.
But if the crypto capital market continues to throw spaghetti at the wall like this, some new and interesting things should eventually stick.
Importantly, they may not all be cryptocurrencies.
Wall Street has been trying less and less recently: Tomasz Tunguz pointed out that since 2018, only two companies with revenues below 100 million dollars have gone public in the US.
The inability to provide new investment opportunities for investors is at least partly due to the high costs of the IPO process: Tunguz estimates that the cost for a company with $100 million in revenue to go public on a U.S. stock exchange can be as high as $26 million.
This is a costly financing method.
In comparison, financing through cryptocurrency is almost unbeatable in terms of cost.
In some cases, that is indeed the case: the tokens issued by Zora "are just for fun," meaning that Zora can raise capital without having to sell equity—this is truly a peculiar trick that can only be achieved in the cryptocurrency space.
So far, this hasn't worked out well for crypto investors. For investors in most cryptocurrency tokens, the returns are pretty bad.
Of course, many people have become wealthy through cryptocurrency, but they did not do so by creating or investing in anything useful.
On the contrary, they mainly get rich by creating tokens.
Andrew Carnegie was not interested in this - he believed that the success of a business should stem from "exchanging value for profit," rather than merely providing new speculative opportunities.
But he may have some sympathy for the cryptocurrency market, as during his time, the stock market was not very serious either—until he merged his Carnegie Steel Company into U.S. Steel, creating the first modern stock.
U.S. Steel is precisely the product of the kind of financial engineering that Carnegie mocked.
But it is also the first company to reach a market value of one billion dollars, the first company to publish modern financial statements, and it can be said to be the first company to truly achieve public ownership.
The cryptocurrency capital market is still in the stage of creating tokens.
But their moment of American steel may—finally—be coming.
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Why is it said that the encryption capital market is still in the stage of creating Tokens?
Written by: Blockworks
Translation: Bai Shui, Golden Finance
The deceit of business lies in speculation. Merchants always exchange value for profit, thus playing a beneficial role.
——Andrew Carnegie
When asked about the competitive threat posed by the newly established Federal Steel, Andrew Carnegie scoffed that the company's real expertise was in "manufacturing stock certificates" rather than steel.
This dismissive comment symbolizes the boom of industrial "trust" stocks in the 1990s, with Carnegie believing that these stocks were mostly unrelated to business and closely tied to speculation.
Of course, there are exceptions—the large monopoly trusts established in fields such as oil, sugar, and tobacco have proven to be good investments, as expected.
But there are also some trusts established in areas such as ropes, wallpaper, and coffins that are essentially just stock promotion schemes, not so.
In 1893, the collapse of the National Cordage Company (the "Cordage Trust") even triggered a widespread financial panic, leading to the failure of many other trusts engaged in the "manufacturing of stock certificates" business.
This result may serve as a warning for the cryptocurrency industry, as it is still known for creating tokens (rather than value).
The vast majority of tokens have no real use - and those that are truly useful mostly just represent different ways of trading useless tokens.
The cryptocurrency market remains highly self-referential, but there has been hope that this will change over time: establishing a new financial system will attract assets and investors.
If that's the case, it feels like they could arrive at any moment—current technology is mature enough, blockchain space is cheap and abundant, and the U.S. Securities and Exchange Commission (SEC) has also relaxed regulations.
There are signs that all of this may be happening, which is hopeful.
For example, the phenomenon of real-world assets being transferred on the chain has significantly increased—this is mainly attributed to the success of BlackRock's tokenized money market fund BUIDL (which truly outperforms its off-chain counterparts in many ways).
Stablecoin assets are also showing an upward trend, and it may just be getting started: Mastercard announced this morning that it will use stablecoins for payments, which could ultimately bring cryptocurrencies into the mainstream view of non-crypto users.
Citibank's recent report predicts that by 2030, the asset management scale of stablecoins will soar from the current 240 billion dollars to 3.5 trillion dollars.
(Note: I calculated that there are four and a half years left until 2030. I know this is shocking, but it is a fact.)
If on-chain tokenized assets reach 3.5 trillion dollars, then investable assets will also follow.
For example, I recently purchased two Pokémon cards and a bottle of whiskey on the blockchain, simply because I had some spare money on the chain, and cryptocurrency made it very easy to buy Pokémon cards and whiskey.
So convenient that I now consider both of these things to be investable assets—no need to receive or store collectibles like before, which has changed the game.
Investing in card games and whiskey is more interesting than earning 4% on BUIDL or losing 100% on memecoins.
I hope cryptocurrency investors will soon have more options.
Kyle Samani even believes that there will be more choices in the future: "Almost all assets will be traded on permissionless systems that are essentially global, like Solana," he predicted in a recent report on the future of the cryptocurrency capital markets.
If that's the case, it certainly includes stocks and bonds, but what's more interesting is that it also includes a brand new type of crypto-native asset.
For now, it's still hard to imagine what these futures will look like, apart from the current issuance of blockchain and DeFi tokens, which are almost all used for cryptocurrency transactions in a self-referential way.
But now that block space is so cheap and abundant, people are trying new things.
For example, Time.fun is an experiment that tokenizes people's time; Zora is an experiment that uses "content coins" to showcase and prioritize information; TRUMP, a "celebrity coin," is an experiment that tokenizes compensation; Story Protocol is an experiment for programmable, tokenized intellectual property; Believe App is an experiment that converts X posts into memecoins (or "creative coins"), which can fund the business ideas they represent.
Like most experiments, these experiments can fail.
But if the crypto capital market continues to throw spaghetti at the wall like this, some new and interesting things should eventually stick.
Importantly, they may not all be cryptocurrencies.
Wall Street has been trying less and less recently: Tomasz Tunguz pointed out that since 2018, only two companies with revenues below 100 million dollars have gone public in the US.
The inability to provide new investment opportunities for investors is at least partly due to the high costs of the IPO process: Tunguz estimates that the cost for a company with $100 million in revenue to go public on a U.S. stock exchange can be as high as $26 million.
This is a costly financing method.
In comparison, financing through cryptocurrency is almost unbeatable in terms of cost.
In some cases, that is indeed the case: the tokens issued by Zora "are just for fun," meaning that Zora can raise capital without having to sell equity—this is truly a peculiar trick that can only be achieved in the cryptocurrency space.
So far, this hasn't worked out well for crypto investors. For investors in most cryptocurrency tokens, the returns are pretty bad.
Of course, many people have become wealthy through cryptocurrency, but they did not do so by creating or investing in anything useful.
On the contrary, they mainly get rich by creating tokens.
Andrew Carnegie was not interested in this - he believed that the success of a business should stem from "exchanging value for profit," rather than merely providing new speculative opportunities.
But he may have some sympathy for the cryptocurrency market, as during his time, the stock market was not very serious either—until he merged his Carnegie Steel Company into U.S. Steel, creating the first modern stock.
U.S. Steel is precisely the product of the kind of financial engineering that Carnegie mocked.
But it is also the first company to reach a market value of one billion dollars, the first company to publish modern financial statements, and it can be said to be the first company to truly achieve public ownership.
The cryptocurrency capital market is still in the stage of creating tokens.
But their moment of American steel may—finally—be coming.