#25 Investing for All
Why crypto will democratize investing
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1 Take 🌶️
Before we get goin’, I first wanted to apologize to my readers. It’s been ~4 weeks since my last post — you subscribed to a weekly newsletter and I haven’t been holding my end of the bargain. It’s been crazier than I imagined trying to build a business alongside everything else I’m working on — including writing this newsletter. It’s important to me that I hold myself more accountable, so I’ve decided to scale back to writing this 2X per month — and then surprising you with bonus content where I can. Appreciate your patience. Let’s go!
The next decade is going to make the term ‘investor’ irrelevant. Why? Because everyone will become one.
What’s the first thought that pops into your head when I say “investor”? I’d wager it’s probably a middle-aged white man who owns a bunch of stocks & real estate. And yes, movies and TV shows have certainly perpetuated this stereotype — but it’s not far from the truth. Society has consistently put up barriers to entry to participate in investing. It starts with financial education not being taught in school but extends to age restrictions, accreditation rules and other security/compliance laws. On one hand, critics claim these restrictions are put in place to protect non-sophisticated investors from losing $$, but on the other hand, participating in the lottery or sports gambling is super accessible. How does that make any sense?
To be clear, none of this is an accident. Existing rules are set-up so that access to investing favors a select few. The fewer that play, the more of the pie there is to claim. And those who are playing want to keep it that way. It’s why the top 10% of families in the US control ~70% of the wealth. For years, people have been clamoring to make investing more accessible, and while there have been modest improvements around education and tools, nothing has meaningfully changed — until recently.
One of crypto’s core capabilities is to digitally financialize anything (physical or mimetic) with really low friction. This infinitely broadens the investable universe by enabling the owning, trading, or fractionalization of literally just about anything including:
Culture & Memes - Instead of talking about culture or laughing along with a meme, you can buy into it. We’ve seen this play out with with $DOGE/$SHIB and virtually every leading NFT project including Bored Ape Yacht Club.
Being a Fan - Artists or other influencers will create social tokens that effectively represent equity in the artist which is extremely powerful because it aligns incentives for both the artist and the fan. Imagine if Olivia Rodrigo had a social token and you were an early holder: you want more people to listen to her so you’d play her music on every TikTok you made -> others in turn would become fans and want to buy the token -> token price goes 📈. Everyone wins.
Governance - DAOs (check out our DAO 101 breakdown) enable community-managed governance by enabling only holders of the governance token to participate in decision-making.
Membership - Historically, membership has used the renter model: you pay for some service $X/month and then cancel when its no longer needed. NFTs are introducing an innovative model where you can own membership while having the ability to sell it if you no longer need (potentially at a profit).
Royalties - Music artists are beginning to create NFTs that allow holders to share existing or future streaming royalties.
Collectibles - Whether its a digital collectible or digital ownership of a phsyical collectible, it’s easier than ever to buy, trade, or sell these with crypto.
Synthetics - Synthetics are digital mirrors of other tangible things. For example, Mirror Protocol enables anyone with a crypto wallet to trade real-life stocks which are represented as synthetic digital tokens. I know a handful of parents whose teenage children are using this to learn about the stock market because the law prohibits them from trading on brokerage accounts.
There’s three reasons why all of this is so powerful: 1) democratizes ownership by making what you own (culture, fandom, etc) more meaningful and the ability to own simpler to a broader swathe of people, 2) aligns incentives, and 3) benefits early supporters.
So what does the future look like?
Every kid around the world growing up 10 years from now will be an investor, whether they know it or not. They’ll seek out ownership in their favorite artists hoping to discover them early, invest in collectibles that matter to them, and actively participate in culture & communities they identify with — all on a medium (digital + crypto) that’s native to them. The true potential for all of this is to unlock the massive amount of wealth sitting in traditional assets to this newer asset class, which IMO is our best bet to shrink the vast wealth gap that exists today.
If you liked this, I’d appreciate it if you share it with friends who might like this!
2 Things To Check Out 🤔
1. I want to give a quick shout-out to a couple crypto education newsletters who have been absolutely crushing it recently. I encourage you to check them out!
My friend Matt Kim is building Smoothie, a visual newsletter demystifying crypto concepts.
My friend and fellow reader Noah has been writing Shift, that keys in on important web3 news, events and takes that you need to be on top of to make it in this space.
2. If you think you’re late to crypto, always good to be reminded how early we still are…
Always be learning,