Why is the crypto capital market still in the stage of making tokens?

Words: Blockworks

Compilation: Whitewater, Golden Finance

 

The falsification of business lies in speculation. Businessmen always play a beneficial role by exchanging their earnings for value.

– Andrew Carnegie

 

Asked about the competitive threat posed by the new Federal Steel, Andrew Carnegie scoffed that the company's real specialty was "making stock certificates," not steel.

 

The dismissive comments symbolized the boom in industrial "trust" stocks of the nineteen-nineties, which Carnegie believed were mostly not about business but about speculation.

 

There are, of course, exceptions – large monopoly trusts set up in areas such as oil, sugar and tobacco have unsurprisingly proved to be good investments.

 

But there are also trusts set up in areas such as ropes, wallpaper, and coffins, which are essentially just stock promotion schemes, and are not.

 

In 1893, the collapse of the National Cordage Company (the "Rope Trust") even triggered a widespread financial panic, leading to the collapse of many other trusts that were also in the business of "manufacturing stock certificates".

 

This result may be a cautionary tale for the crypto industry, which is still known for producing tokens, not value.

 

The vast majority of tokens don't have any practical use – and the ones that are really useful mostly represent different ways of trading useless tokens.

 

The cryptocurrency market is still highly self-referential, but there has been hope that this will change over time: build a new financial system and there will be an influx of assets and investors.

 

If that's the case, it feels like they're coming at any time – the technology is mature enough, the block space is cheap and plentiful enough, and the U.S. Securities and Exchange Commission (SEC) has deregulated.

 

There are signs that this may be happening, and that's hopeful.

 

For example, there has been a significant increase in the movement of real-world assets on-chain – largely thanks to the success of BlackRock's tokenized money market fund, BUIDL, which in many ways is truly superior to its off-chain counterpart.

 

Stablecoin assets are also on an upward trend, and may be just getting started: Mastercard announced this morning that it will be using stablecoins for payments, which could finally bring cryptocurrencies into the eyes of the non-crypto public.

 

A recent Citibank report predicts that stablecoin AUM will soar to $3.5 trillion by 2030, up from the current $240 billion.

 

(Note: I did the math, and there are four and a half years left until 2030.) I know it's shocking, but it's true. ）

 

If on-chain tokenized assets reach $3.5 trillion, then investable assets will follow.

 

For example, I recently bought two Pokémon cards and a bottle of whiskey on-chain, simply because I have some spare money on-chain, and cryptocurrency makes it very easy to buy Pokémon cards and whiskey.

 

So convenient that I now consider both things to be investable assets – no need to receive or store collectibles like before, which is a game-changer.

 

Investing in cards and whiskey is also more fun than making 4% on BUIDL or losing 100% on memecoin.

 

Hopefully, crypto investors will soon have more options.

 

Kyle Samani even believes there will be more options in the future: "Almost all assets will be traded on an inherently global and permissionless system like Solana," he predicted in a recent report on the future of crypto capital markets.

 

If so, that certainly includes stocks and bonds, but more interestingly, it also includes a whole new type of crypto-native asset.

 

At the moment, it is still difficult 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 plentiful, people are trying new things.

 

For example, Time.fun is an experiment to tokenize people's time; Zora is an experiment in using "content coins" to display and prioritize information; TRUMP, a "celebrity coin", is an experiment in tokenizing compensation; Story Protocol is an experiment in programmable, tokenized intellectual property; The Believe App is an experiment in converting X number of posts into memecoins (or "creative coins") that can fund the business ideas they represent.

 

Like most experiments, these experiments can fail.

 

But if the crypto capital markets continue to throw spaghetti against the wall like this, something new and interesting should eventually hold on.

 

Importantly, they may not all be cryptocurrencies either.

 

Wall Street has been trying less and less lately: Tomasz Tunguz notes that since 2018, only two companies with revenues of less than $100 million have IPOed in the United States.

 

The failure to provide investors with new investment opportunities is at least partly due to the prohibitive cost of the IPO process: Tunguz estimates that a $100 million company with revenue would cost as much as $26 million to list on a U.S. stock exchange.

 

This is a costly way to raise money.

 

In contrast, financing through cryptocurrencies is almost unbeatably cheap.

 

In some cases, this is true: Zora issues tokens "just for fun," meaning that Zora can raise equity without having to sell equity – a fancy trick that can only be achieved in the crypto 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 get rich through cryptocurrency, but not by creating or investing in something useful.

 

Instead, they get rich mainly by making tokens.

 

Andrew Carnegie wasn't impressed by this – he argued that corporate success should stem from "trading value for earnings," not just offering new opportunities for speculation.

 

But he may have sympathy for the cryptocurrency market, which wasn't very serious in his day — until he merged his Carnegie Steel Corporation with U.S. Steel Corporation, creating the first modern stock.

 

U.S. Steel is the product of the kind of financial engineering that Carnegie derided.

 

But it was also the first company to have a billion-dollar market capitalization, the first to issue modern financial statements, and arguably the first to truly achieve public ownership.

 

The cryptocurrency capital market is still in the stage of making tokens.

 

But their American steel moment may – eventually – be upon us.

 

This article is sourced from Foresight News:

https://foresightnews.pro/article/detail/83623

Respectfully submitted by the AIC Team

May12, 2025