The Distribution by Juniper Square
00:45:49 · Brandon Sedloff
[00:45:49] S1: So I know we're tackling these, like, massive, big, gnarly topics that, you know, each would take hours, if not days or or weeks to go through. But, you know, in in the time we have left, I, you know, I know one of your your other areas of focus both both historically as well as is present is really on kind of tokenization and and kind of the the crypto and crypto infrastructure space. I'd be curious, you know, and as a a leader in this space, like, know, paint paint the picture, like, is happening in kind of token infrastructure two point o right now? What what does that mean if people are talking about tokenization, but they're not in VC or they haven't invested in the space? Like, what should we be thinking about as it relates to to tokenization and token infrastructure?
00:46:30 · Nick Shalek
[00:46:30] S0: Yeah. You know, we we... We've been using this term tokenization for a long time too. And it's one of these terms that you use, and every year you try to redefine it and you try to think about what it really means. So I I don't know that we've gotten there yet. We actually... We wrote a letter, which if anyone listening is interested, is on our website that you can you can get about tokens and tokenization last year. In part in response to something we were seeing, which was, you know, we had been... People who were interested in crypto or payments had been talking about tokenization for years. You know, the core innovation underlying Apple Pay in many ways was tokenization. So if you you talk to payments people, they would talk about tokenization in a certain way, meaning just a privacy focused abstraction of a card identifier so that you could, you know, you can you can move credentials around more easily. If you talk to crypto people, they talk about tokenization a different way, like, representing an asset on a blockchain. And then if you talk to AI people, you know, tokenization meant turning... You know, organizing data in a way that you could input them into transformer architectures, you know, into different ML models. And we started to see this thing, which was like, you'd listen to the earnings call of Google, and they'd, you know, be bragging about how many tokens they'd processed. Or you'd listen to, you know, Visa, and they'd talk about how many tokens that, you know, the Visa network had issued, or you'd listen to Coinbase, and Brian Armstrong would talk about how many tokens you could trade. So we're like, what is the common thread between the the... This term? Why is everyone talking about them? And I think that the highest... Our highest level of conclusion about what tokenization is really about in whatever form you're talking about it is, you know, we're kind of preparing the world to be more legible, more understandable to machines and to agents, you know, more programmable. And by virtue of being more programmable, you can make it more intelligent so you can do things that are lower cost, you know, ultimately more efficient, more accessible globally, and you can do more personalized things.
00:48:26 · Nick Shalek, Brandon Sedloff
So, you know, imagine to bring it, you know, back to something more practical in the financial services context, you think about how uneven the distribution of access to investment opportunities is around the world. If you're in The US, you can hold... You you always can can hold treasuries and earn a yield on them, but most people around the world can't. They just don't have a way actually to hold treasuries. You take something very simple like that, and then you think about, you know, the many orders of magnitude, more different types of investment opportunities and and ways of intelligently distributing capital. So tokenization is really about, well, how do I standardize that investment product? How do I represent it on some sort of a value network so that everybody around the world can access this thing in any amount at any time in any increment? And that's... You know, when we talk about tokenization in the crypto context or... Yeah. That's usually the the way it's the way it's meant. So lots of different aspects of what I'm saying, and and glad to talk about it, you know, in more specific context. But I think we've got another couple decades of investing in tokenization. [00:49:28] S1: Just since I spent a lot of my time with real estate people, quick quick take on, you know, where where do kind of assets, like real assets, fall on the continuum of things that you believe should and or will be tokenized at some point?
00:49:41 · Nick Shalek
[00:49:41] S0: I think every every asset will be tokenized. And when I say tokenized, they might be put on a public blockchain like Bitcoin or Ethereum or Solana. They might be put on a private network, a a private blockchain where you have... You know, the nodes that run the chain are permissioned. That would be like, Tempo is a a private blockchain that's being launched by Stripe and some others, Paradigm and others, or Canton, which is a private network. It it might be on a government sponsored network. You know, in payments, we've seen a huge explosion in the amount of payment volume and activity in markets that have successfully launched and mandated the adoption across banks of real time payment networks. So in Brazil and India, and most people may not... May may or may not know this, but you have in Brazil PIX, in India, a payment network called UPI. The number of users and the amount of volume on those networks has just exploded. And compared to their traditional electronic payment networks, you have much higher payment volume, many more types of payments. You know, if you give entrepreneurs is something, you know, I deeply believe, and I think it's just empirically evident is if you give people the building blocks to build things and you make it safe and you give them a path to do in a regulated way, you'll see a huge amount of innovation that benefits consumers. So I think every, you know, every asset will will ultimately be represented in a digital way that software interfaces, agents, or software systems like, you know, Juniper Square can can represent and and can move value around. And that'll happen in that'll happen in real estate. Now where it happens first and how how it gets distributed, I think there's lots of different views and opinions. But the basic idea of, like, anybody can have a wallet anywhere in the world and can invest in, you know, an asset. Say it's a a residential real estate opportunity. Somebody wants to get exposure to The US housing market. What's a simple low cost accessible way to do that for for people all over the world? I think doing that in tokenized form on a blockchain is just gonna turn out to be the best form. Yeah. One fun experiment anybody can do is, you know, go ask ChatGPT or or ask Claude or your favorite LLM, you know, what they think, like, what's the future of of value.
00:51:50 · Nick Shalek, Brandon Sedloff
If they were to design something for agents, you know, how would they do it? And and they'll they'll end up... You know, for for investing in real estate or for originating real estate projects, and they'll end up describing a blockchain. So I think we're headed there, but it's the investor's challenge to figure out, like, what's the path. [00:52:10] S1: Awesome. Well, we could go on for hours. We're, unfortunately out of time. I've really enjoyed our conversation as I always do. Thank you so much for joining me, and I am looking forward to the next time that we get to chat. [00:52:21] S0: Thanks, Brandon. I appreciate you having me. [00:52:23] S1: Thanks Thanks for listening to the latest episode of The Distribution by Juniper Square. If you like today's podcast, please share it with a colleague or a friend. And don't forget to subscribe and rate The Distribution on Apple Podcasts, Spotify, or wherever you listen to podcasts. You can connect with me on LinkedIn by going to www.linkedin.com/in/bsedloff, or you can find me on Twitter at b Sedloff. You can also find a video recording of this conversation on demand at junipersquare.com/the-distribution. Until next time.