tl;dr: crypto-native art, secured by non-fungible tokens (NFTs) on a blockchain, can be converted into cash in seconds. A new market and asset class emerges.

I didn’t know what day it would arrive, but I knew it would arrive one day.

And it happened on September 15th.

This tweet from NFTfi.com announcing that it is now possible to take blockchain-backed digital art (the Reese’s peanut butter cup of crypto), and use that as collateral, in this case, for the DAI stablecoin.

Liquidity Unlocking

I know I keep talking about the “Great Liquidity Unlocking” and I am falling more and more in love with this term (which is a huge danger), but I can’t seem to shake that feeling of what is happening.

For centuries, people have held assets of all kinds, but most of them are illiquid. You just can’t turn them into cash.

As assets become tokenized, secured by a blockchain and with verifiable ownership, they become more liquid because ownership and possession can be split with far less friction.

That allows people to own all types of assets of their choosing and not have to compromise as much on turning those assets into cash when they need them.

I haven’t gone into the NFTfi.com site yet, but I intend to at some point.

Crypto art is the low-hanging fruit of liquidity provisioning for new assets. It’s the first, not the last.

When Everything Gets Tokenized

Here’s one that may be a bit further down the road.

Pigs.

China, in an effort to stimulate its economy, is allowing farmers to use their hogs as collateral for loans.

It’s not hard to think of a way to embed a chip in a hog that would be connected to the specific biotrackers of the specific animal and also registered on a blockchain.

So, for example, if a farmer put up 100 hogs for collateral and 2 of them died, the bank could ask for 2 more to be put into the loan vault. It’s far-fetched, but not so out there.

One Giant Leap for Humankind

Art, born on the blockchain, is the first step. But, like Neil Armstrong, it’s the 2nd step that really matters.

The liquidification of every asset. I just invented that word, btw.

To stay on top of this, follow Jamie Burke and Jake Brukhman, two of the NFT leaders out there. Jake’s recent piece about their Rarible investment in “all digital content is going on-chain” is a great on-ramp.

Maybe one day they’ll open up an NFT ETF…that’s what I want.