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Traditional finance has produced many good things, such as near-instant payments, intuitive mobile apps, etc. But on the other hand, its centralized and compartmentalized infrastructures have created deep financial inequalities across geographic and cultural lines. Approximately one percent of the world's population has Over $87 trillion in financial assets, or over 43% of total global financial wealth. Over 63% of their wealth is in financial assets, compared to 37% for the majority.
Blockchain technology can solve this problem. Inclusivity is the watchword of decentralized wealth-generating protocols and financial networks, but we should not take it for granted, especially when traditional players like Blackrock, VanEck, etc. are entering the space with a range of centralized products and ETFs.
Institutions wield a double-edged sword
In addition to macroeconomic factors such as easing inflationary pressure, exchange-traded funds (ETFs) have been crucial in driving bulls back into cryptocurrencies. The optimism surrounding these developments is understandable. Exposure to blockchain-based digital assets through well-known instruments could provide regular users with a further impetus to jump on board.
Could this be the tipping point we have been chasing all these years? Yes, provided we do not inherit persistent problems such as high barriers to wealth creation and instead optimize inclusion.
To qualify for a US wealth management firm, you need a minimum of $2-5 million in investable assets, while large fund managers like Blackrock cater exclusively to high net worth individuals with portfolios exceeding $100 million. Only the global financial elite can meet any of these criteria.
Offering crypto-related products is unlikely to make established institutions more inclusive, because the roots of exclusionary business models run deeper than the policies or intentions of this or that company.
The widespread disparity of information is inherent to the very structure (centralized and compartmentalized) of traditional financial systems. This evolved over decades and led to an uneven playing field that is quite difficult to fix. In fact, most attempts to find viable solutions within traditional financial paradigms have so far failed. For example, STOCK LAW Members of the US Congress were unable to be prevented from using insider information. To date, no member of Congress has been sanctioned under this law, mainly because it is very difficult to determine the extent of “material information” affecting a particular transaction, despite the existence of centralized records.
There is no way that these kinds of crude approaches to ensuring a level playing field would work in the user-centric, pseudonym-based world of blockchains. However, the underlying technology has unique capabilities to provide equal access for all while natively supporting fairness.
Wealth and financial freedom for all
Blockchain is one of the most powerful wealth and access equalization technologies since the Internet. It offers new sources of income and investment instruments directly to the average user. The peculiar dynamics of the current market cycle are making this clearer than ever. As Mike Mallazo recently said: crypto-game-tokenization-financialization” target=”_blank” rel=””>wrote:
“The real egalitarian appeal of crypto isn't that it democratizes payments, but that a ZYN-fueled degenerate in his mom's basement can outperform an MIT-trained quant who spent a decade at Goldman..”
So far, institutions have been ahead of retail users on certain flanks. However, at the same time, grassroots users are also generating life-changing wealth through memecoins, etc. For example, one trader recently crypto-trader-turns-2-2k-054205207.html” target=”_blank” rel=””>turned From $2,275 to $2.6 million in about eight hours (not financial advice). It's pretty common these days.
This has been possible because the barriers to entry are very low and almost non-existent. Anyone can start their wealth-building journey with as little as they want. No gatekeepers. No questions asked. No minimum income requirements. The degenerate and the prince are practically on the same level.
Unlike traditional finance systems, blockchain-powered financial networks actually offer the underprivileged a substantial and fair chance to rise up. More so with advanced wealth-generating protocols where an average user can earn millions by investing alongside top asset managers.
The emerging paradigm of social investing creates a meritocratic environment where experienced investors and amateurs can mutually benefit. While the former can monetize their battle-tested strategies, the latter gain a stress-free means of making profits.
It is also possible to build accessible wealth management systems that support a wide range of asset classes including meme coins, DeFi, nfts, RWAs, etc. This will further democratize the space and unlock financial opportunities available only to the wealthy elite.
No matter who or where they are, everyone can achieve financial freedom using blockchain-based tools. Users are the biggest winners of this change. That’s justice personified.
Last but not least, a robust blockchain-based infrastructure is the way to offset the potential negative impact of widespread institutional adoption. We will fully reap the benefits of increased institutional participation only when decentralized and community-oriented systems are equally robust.
It’s a battle of narratives and perceptions, where the central voice of crypto must be louder than those who try to misuse the technology for their selfish interests. ETFs, etc., can attract new users, and that’s great, but native protocols and their communities must set the standards. We must not repeat the historical mistake of exclusion.
