Opinion by: Justin Banon, co-founder of Boson Protocol
Web3 is the foundation of a new economic order. Through tokenizing real-world assets (RWAs), we can break free from outdated systems and unlock exponential wealth.
Each technological leap in human history has unlocked new wealth and possibilities, from the rural to the industrial and digital eras. Every system, however, has its limits. Today’s digital economy struggles with sustainability and inclusivity. It’s time to upgrade.
Web3 offers the potential for this next leap. Tokenizing RWAs — particularly luxury goods like high-value jewelry — into digital tokens paves the way for an inclusive, computable economy.
This transformation enables broader access to ultra-luxury markets and paves the way for a more inclusive, computable economy through new forms of ownership. The future lies in this shift toward coordination and tokenization.
The soft power of coordination
Institutions of social coordination are key to technological progress, although they seldom advance at the same speed as industry. When they do, however, the leaps forward can prove spectacular. Think about how written language enabled the administrative systems of the first societies, or try to imagine a global economy without universal time.
Blockchains and the broader Web3 technology stack represent the next leap forward in institutional technology: Crypto technologies facilitate trust and lower the costs of economic coordination. This innovation enables elements of the economy to “talk” to each other without intermediaries and to verify who and what they are with certainty. The economy can reliably process the information in these transactions. This economy can now compute parties’ interactions rather than process them unreliably.
Recent: Next-gen smart contracts to reshape RWA tokenization: AMA recap with Hathor Network
In modern economies, the “computability” of capital works through layers of slow, expensive, unreliable intermediation. This computability limit is a constraint on the scale of complexity that global economies can attain — and a ceiling on their prosperity.
Blockchain enforces hard property rights and automates commitments, ensuring money is only released when the sale conditions are met. Transactions become immutable and verifiable, transforming the system from unreliable and opaque to precise and deterministic, enabling a more efficient, trustless economy.
Solving the physical asset oracle problem
Anyone who has traded cryptocurrencies or NFTs has experienced the certainty of a robust blockchain-enabled economy. The next leap in economic complexity is to bring all forms of capital, including offchain RWAs, into the crypto economy with the same reliable and computable “hard” properties as native onchain assets. Only by “hard tokenizing” RWAs will we accelerate the transition.
This challenge is known as the physical asset oracle problem. Asset tokenization protocols exist, but they still rely on IOUs, which can prove just as flaky as offchain deals. Their commitments are not yet strong enough.
Early adopters of the computable economy
One area witnessing the early adoption of this technology is fashion and luxury. This segment is experiencing its first global slowdown, COVID-19 aside, since the Great Recession. According to a recent Bain and Co. report, this is driven by economic uncertainty, rising prices, and consumers increasingly prioritizing experiences over products. The slowdown is particularly stark among younger generations, which shows a notable decline in customer advocacy.
For ultra-luxury items, brands traditionally catered to a small market of high-net-worth collectors. Enabling the fractionalization of such luxury items, a new generation of customers can own a share of these assets.
Fractions of these assets can then be traded or plugged into decentralized finance for use, for example, as collateral for loans. For luxury brands, this fractionalization ensures a direct route to new audiences globally, equipping them to navigate the recent slowdown.
Web3 protocols offer the potential for this next leap, as they enable the tokenization of RWAs — especially luxury goods like jewelry and art — into digital tokens. This transformation enables broader access to ultra-luxury markets and paves the way for a more inclusive, computable economy through new forms of ownership.
Brands could sell or gift ultra-luxury pieces to their communities, cultivating shared ownership, reshaping the concept of ownership in the fashion and luxury sectors, and creating direct-to-consumer markets for ultra-luxury assets. That will empower communities to own luxury items once accessible only to elite buyers and strengthen the relationship between luxury brands and their communities, unlocking new engagement opportunities.
Time to upgrade the operating system
Each new economic order brings greater complexity and the potential for exponential wealth. History has shown that correlation time and again. According to crypto and traditional finance analysts, the tokenization of RWAs will form the backbone of the next bull run and unlock the transfer of trillions of dollars of value into crypto.
We are at an inflection point of complex systems evolution. The luxury market is the starting point, but our actions today will have a massive influence on what happens next. The opportunities of a computable economic order will stretch beyond just individual wealth. Humankind stands to benefit from a new operating system with the scope to address the existential threats that face our species.
An upgraded metasystem offers the prospect of extraordinary human achievements currently beyond our reach or imagination. We could burst the digital ceiling to achieve global sustainability or secure our future as an interplanetary species. It’s all a question of coordination.
Justin Banon is a co-founder of Boson Protocol and has been awarded World Economic Forum Technology Pioneer status. Justin studied physics at Imperial College London and holds two Master’s degrees.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.