Your #1 Easiest Way to Profit from the $2.1 Quadrillion “World IPO Day”

By Jeff Brown, Editor, The Near Future Report

SPECIAL REPORT

A Brownstone Research Publication

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Your #1 Easiest Way to Profit from the $2.1 Quadrillion “World IPO Day”By Jeff Brown, Editor, The Near Future Report

The year is 1602 in the city of Amsterdam. And the course of financial markets is about to change forever…

This was the year that the world’s first publicly traded stock became available for purchase.

The company was the Dutch East India Company – also called VOC – a trading conglomerate believed to have been the largest company to ever exist at that time.

Back then, shipping expeditions were typically funded by wealthy, private investors. One shipping expedition is estimated to have cost roughly $300,000 in today’s dollars.

It was an expensive – and risky – endeavor. If the ship sunk or was attacked by pirates, investors lost all their money. Worse yet, it could be years before the investors learned of the ship’s fate. It was like a 1600’s version of venture capital in that way. Some investments were absolutely spectacular, and many were a complete disaster.

To offset this risk, VOC pursued a novel solution. The company issued “shares” that could be publicly bought and sold on an exchange in Amsterdam. The shares looked something like this:

Source: Bruce Fenton

Today, we take publicly traded stocks for granted. But at the time, this was revolutionary.

For the first time, enterprises could pool capital from everyday people. And it was the first time that ordinary investors could own a portion of a public company and profit from its growth.

And it was this event that started the world down a path that would create what we understand today as modern stock markets.

Today, we’re faced with a similarly momentous event. In the years ahead, we’ll still be able to invest in public companies. But that won’t be all. Thanks to bleeding-edge technology, anything of value will be able to be publicly traded.

Special Report 2021

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Imagine investing a few hundred dollars in a vintage Ferrari. Or perhaps we’d like to invest a small amount into a new commercial office building. Ever watch the Kentucky Derby? Imagine owning a portion of the winning horse.

It’s hard for us to wrap our heads around a concept like this. Yet this technology will allow retail investors to invest in assets that have historically been “off-limits.”

I know what we’re probably thinking. It sounds impossible. It’s not. Here’s why…

Welcome to The Near Future Report

Welcome to The Near Future Report. I’m thrilled to welcome you as our newest member. Our mission here is to profit from technology trends that are right around the corner. We do this by identifying “sleep well at night” technology investments that are still in “growth mode.”

My name is Jeff Brown. I will be your editor.

For nearly 30 years, I worked as a technology executive for firms like Qualcomm, NXP Semiconductors, and Juniper Networks.

I’ve earned degrees from Purdue University and the prestigious London Business School. I’ve also received professional certificates from MIT, Stanford, and the University of California, Berkeley, School of Law. I’m also an alumnus of Yale University’s School of Management.

Also, I’m an active angel investor in early stage technology companies. As of this writing, I’ve invested in 200+ private deals. You might even know some of my private investments. I was a private investor in Coinbase, for instance, the world’s largest digital asset exchange that recently went public.

I don’t mention this to brag. I simply want to emphasize that I’m not a typical Wall Street analyst trying his or her hand at technology

research. I come from the industry. I’ve helped build and turn around technology companies. And I’ve devoted my entire life to researching, working with, and investing in bleeding-edge technologies.

As I mentioned above, we are on the verge of an innovation not seen since the first public stock was traded in the 1600s. It will change the course of finance forever. And for knowledgeable investors, it will be one of the most lucrative investing trends of our lifetimes.

Unlocking the Private Economy

Before the invention of publicly traded stocks in the 1600s, the market for public equities was, of course, zero. This makes sense. After all, how can there be a market for public equities if the asset class doesn’t exist?

Flash forward to today and the value of all publicly traded stocks around the world is estimated to be more than $90 trillion.

As an asset class, global equities went from zero to almost $100 trillion.

Something similar is happening today. But unlike equities – which give investors access to a “public economy” – this technology has the potential to also unlock the world’s private economy.

Consider the following:

• The value of all commercial real estate in the world is around $33.3 trillion

• Global residential real estate is estimated to be worth $168.5 trillion

• The value of all above-ground gold is roughly $10.8 trillion. All physical silver is $1.3 trillion.

• In 2020, the world’s twenty most valuable

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private companies were worth a combined $566 billion

• The global collectibles market is valued at $370 billion

• Some have estimated the value of all the artwork in New York’s Metropolitan Museum of Art could be worth $400 billion.

I could go on. And the technology I’m sharing today has the potential to “unlock” all this value and make it available to retail investors.

World IPO Day

The way this happens is through a process known as “tokenization.”

Tokenization is the process of substantiating a claim of ownership of an underlying asset. In this way, the process is similar to the securitization process we see with public companies.

The first major difference, however, is that digital tokens – as they are known – are supported by blockchain technology.

Blockchain technology – also known as distributed ledger technology – is most often associated with bitcoin. Blockchain technology is

what supports bitcoin’s decentralized network. And while bitcoin was the first application of blockchain technology, the term is actually a generic one.

Popular blockchains today are not only Bitcoin, but Ethereum, Cardano, Solana, EOS, Polkadot, and so on.

We can think of blockchain technology like the internet protocols we use every day. Popular applications like e-commerce, email, and streaming content run on top of internet protocols. It is a similar idea with digital assets and blockchain technology.

Put even more simply, saying that “bitcoin is the blockchain” would be like saying “Yahoo! is the internet.” But while internet protocols can effectively transfer data, blockchain technology is designed to transfer value across a distributed network.

One of the most exciting applications for blockchain technology is the tokenization of assets. As I mentioned, the process of tokenization can substantiate and define ownership in that asset.

Here’s an easy example: When we purchase a

Source: Publish0x

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piece of property, like a home, we are typically the sole owner of that asset. Perhaps our spouse will also be on the title to the home, but it typically stops there.

But if that property were tokenized, fractional ownership could be conferred to hundreds – even thousands – of token holders.

The value of these tokens would fluctuate just like any other security. If the value of the home increases, the value of the tokens would increase, and the token holders would be able to share in that value creation.

This is a straightforward example. The reality is that virtually any asset can be tokenized and traded. Real estate… gold… oil… art… classic cars… Anything that has value will be tokenized and traded on security token exchanges.

What if you could own 0.000001 Empire State Building tokens… Or 0.0000001 Louvre Museum tokens… Or 0.001 1937 Bugatti Type 57S Hot Rod tokens?

That’s the world we are headed for. I refer to the trend of tokenization as “World IPO Day” because virtually any asset of value that holds interest to others will be able to hold its own “public offering” and begin trading.

And these token exchanges will be global – they will trade 24/7, and settlement will take seconds rather than days.

Also, these tokens will be completely liquid. We will be able to buy, sell, and transfer these assets with ease. We can think of it this way: If we own our home, this asset is highly illiquid. We would have to sell our home – a time-consuming process – before being able to spend any of that value.

Source: Instagram (@theofficemuse)

But if that home was tokenized? We could easily transfer or sell fractions of that value. I found a humorous cartoon that explained this idea.

Funny… But the idea is essentially correct. A tokenized asset would be entirely liquid and could conceivably be used as a medium of exchange.

And while tokenization will unlock the “private economy,” it also promises to disrupt existing financial markets.

The U.S. Capital Markets Are Broken

I have been covering the tokenization trend for my readers for years. In 2018, I shared insights I gained from several exclusive cryptocurrency and blockchain conferences in New York.

At the time, I met with top executives of the New York Stock Exchange and Nasdaq… Top hedge fund managers… And leaders in the blockchain industry. They are all focused on the same thing: the creation of the security token industry.

One executive I spoke to expects security tokens to bring 10% of global GDP – roughly $8 trillion – into the blockchain ecosystem by 2024. That represents a growth of 28X.

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And Bruce Fenton – founding member of the Bitcoin Foundation and managing director of Atlantic Financial – expects to see $20–$40 trillion flow into the cryptocurrency and blockchain space in the coming years. That represents growth of up to 14,000%.

The growth of the blockchain industry will look much like the growth of tech stocks with the rise of the internet. There will be booms and busts as the industry develops… But the technology is real. It will change the world.

To the right is a chart of the Nasdaq Composite, which tracks every stock trading on the Nasdaq exchange from 1985 to today.

As you can see, tech stocks went through major booms and busts as the internet developed and eventually became ubiquitous in our lives.

Now, if you look at the total size of the blockchain ecosystem today… And then gauge the amount of capital that is about to flow into the space… That would probably put us around 1995 on this chart.

This means there is a life-changing upside ahead…

But we are talking about so much more than just massive investment gains. Security tokens will spark an economic boom of historic proportions.

That’s because the U.S. capital markets are not functioning as intended… They are broken.

From 1999 to 2019, initial public offerings (IPOs) collapsed 59%, and most of that decline was in issuances from smaller companies. There was a noticeable increase in U.S.-based IPOs in 2020, with IPO issuances doubling from the year prior.

This was due in large part to the reemergence of special purpose acquisition corporations (SPACs), which I cover in detail in my investment research service Blank Check Speculator. But the fact remains that there are fewer publicly traded operating companies today than there were in 1975, despite GDP increasing significantly.

And many of the IPOs that do occur today involve companies that are valued in the tens of billions of dollars. By comparison, in the 1990s, it was common for a company to reach public markets when they were valued at $1 billion or less.

Simply put, the U.S. capital markets rarely see high-quality small issuances… There is very little interest in these kinds of offerings. That’s a problem because small businesses are the backbone of the American economy.

And it’s not just me saying this. David Weild, the former vice chairman of the Nasdaq, had this to say at the inaugural Security Token Summit in 2018:

We have left GDP growth and undermined U.S. competitiveness because our capital markets are not designed to support small issuances.

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In other words, by restricting capital formation in the U.S. to only large IPOs, we are also restricting economic growth.

Security Tokens Will Reinvigorate Small Companies

So what does this have to do with security tokens?

Security tokens will make it much easier for companies to raise the capital they need to grow.

Registering securities for a traditional IPO is a tedious, expensive process that requires companies to go through several layers of middlemen… And spend millions of dollars on lawyers and brokers.

Security tokens will disintermediate those middlemen, which will reduce costs and simplify the process of launching a Security Token Offering (STO). That will tear down the roadblocks currently preventing small businesses from raising capital… This, in turn, will foster capital allocation to small-cap businesses that will drive economic growth.

And that is why security tokens will be such a robust asset class in the near future.

Massive institutional capital will flow in from hedge funds… pension funds… and family offices. And the blockchain industry’s market cap will likely be valued in the tens of trillions of dollars as a result.

That’s not just blind speculation… It is coming from the highest tiers of Wall Street.

Institutional players have begun entering the digital assets space in limited numbers. Companies like MicroStrategy, Tesla, and MassMutual now hold bitcoin on their balance sheets. JPMorgan has already enabled its large

network of financial advisors to provide a handful of cryptocurrency funds to its clients.

But much of the world’s institutional capital has not yet committed to the digital assets market because they are waiting on a regulated token environment. The security token industry will provide that environment. Small businesses will have access to the capital they need… And institutional investors will gain exposure to an explosive asset class. And guess what? Small investors will benefit tremendously also.

For one, the best small companies have avoided going public because it is too expensive and too much of a hassle to do so. Instead, they have raised money from a small pool of private accredited investors. The normal retail investors have not had access to those deals.

What’s more, security tokens will not trade in fixed units like stocks and bonds – they will be fractionalized like cryptocurrencies.

If you want to buy a stock today, you often must buy at least one share… And your broker would prefer that you buy in even 100-share blocks. Well, many high-quality stocks trade for hundreds and even thousands of dollars per share. That limits access for smaller investors.

For example, Berkshire Hathaway’s A-shares (BRK.A) is trading at $421,000 per share today. The small investor cannot afford to buy even one share of BRK.A. But if Berkshire were a security token, the small investor could buy 1/100th of a token as an example – .01 BRK.A – and thus gain exposure to a legendary trophy asset.

It is difficult to overstate how consequential the trend of tokenization will be. It will change our world in subtle and profound ways. And we are just getting started.

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Readers of The Near Future Report can expect to hear more about tokenization in the months and years ahead. But there are ways to gain early exposure to this trend. I recently completed a new report outlining some of the interesting projects in this area of technology.

But I’d also like to share an easy “set it and forget it” investment that will give us early exposure to the trend of tokenization.

First Mover on the Tokenization Trend

The way we gain exposure early to the tokenization trend is through ETH, the native asset of the Ethereum blockchain. I’m sure many of us have heard of Ethereum, but very few investors truly understand the potential of Ethereum and its involvement in the move toward tokenization.

Right now, the largest use case for tokenization is assets known as non-fungible tokens (NFTs). In another report, I explain in more detail what NFTs are and why they are so interesting (catch up here).

But for now, NFTs are a new asset class, digital collectibles, that are being born in front of our eyes. And the blockchain network leading the way in NFT development and adoption is Ethereum.

Ethereum is a decentralized and open-sourced blockchain. This means there is no central entity that owns and operates the Ethereum blockchain. Open-sourced means its underlying code is viewable and improved upon by anyone in the world. This makes it more resilient to attack.

When Ethereum was released in 2015, it was a way to attach real-world assets like stocks and property to the blockchain. To make this a reality, smart contracts were introduced.

These smart contracts are like small software programs that exist on a blockchain. Developers can make simple programs that simply repeat the same set of tasks – for example, paying the rent every 30 days. Or they can make very complicated programs, such as ones that can determine the value of a complex derivative in real-time.

The possibilities are incredible. And since Ethereum’s launch, the network has seen millions of smart contracts deployed. It has even witnessed new types of smart contracts created that make NFTs a reality. They are known as ERC-721 and ERC-1155.

And it’s these two types of smart contracts that are driving the explosive trend in NFTs happening on Ethereum. According to DappRadar, all but one of the top 20 NFT collections reside on Ethereum.

And as we can see below, some of these NFT collections are commanding sizable attention in terms of lifetime sales volume:

• Axie Infinity: $600 million in sale volume

• CryptoPunks: $400 million in sale volume

• Rarible: $125 million in sale volume

These three collections alone are responsible for more than $1.1 billion in sales. And this all happened within just the last 12 months.

Nearly all the value of NFT token sales is taking place on the Ethereum network. And if an NFT token creator is determining where to deploy their newest NFT, there is a high likelihood they will choose the destination where most of the sales volume is happening – Ethereum.

Ethereum is what a first-mover advantage looks like. And as I’ll show you in a moment, it is not slowing down.

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Here is a chart showing NFT sales on Ethereum over the last few years. As we can see, 2020 was the year sales began to take off. Then 2021 is when the world began to take note, surpassing $1 billion in sales in short order.

What is most impressive here is actually not the billion-dollar milestone that was reached.

It is the number of users taking part in this process. It is not limited to just a few hundred users buying and selling NFTs between one another. It is literally over 40,000 unique wallets per month. This is up from less than 10,000 monthly users in prior years.

In fact, at the time of this report in August 2021, the amount of wallets active over the last month is up 366% compared to the same month from last year.

The network effect here means NFT adoption on Ethereum is exploding. And while the growth is exciting when looking at its current trajectory, we should also keep in mind there are only 40,000 unique wallets per month.

In the overall size of the market NFTs are poised to disrupt – this number tells us we are in the very early days of this decade-long trend.

It’s also important to understand that the technology companies working in the industry are working quickly to make access to NFTs as simple as buying a product from Amazon. It won’t take special expertise or programming skills to be able to interact in this marketplace.

In fact, one of the leading e-commerce technology companies, Shopify, recently announced that it has programmed the ability for NFTs to be purchased using its e-commerce technology. That means that every one of its 1.7 million merchants around the world is now empowered to sell NFTs. And one of the first businesses to take advantage of this is the NBA’s Chicago Bulls.

And institutions like the well-known auction house Sotheby’s, who recently partnered up with NFT platform Nifty Gateway, have demonstrated

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that they understand NFTs are the next generation of the collectibles market.

Pop stars Katy Perry, Jay-Z, and Ashton Kutcher also recently got involved in the industry. And even a legacy financial services giant like the Intercontinental Exchange issued a series of NFTs. These entities are all working hard to make NFTs available to their customers. And this is why we want to get involved in the most promising blockchain for NFTs today. And going forward, Ethereum is the logical choice to support new tokenization projects. This is an asset we’ll want to own for years to come.

How to Buy Ethereum

Purchasing and holding a digital asset like ether has never been easier, thanks to a variety of user-friendly exchanges. If I were to make any recommendation for a cryptocurrency exchange, it would be Coinbase.

Coinbase is a company I know very well, having invested in the company years ago as a private investor. And Coinbase is one of the most buttoned-up, regulatory-compliant, and accessible exchanges in the market.

If readers would like, they can open a Coinbase account today, invest in ether, and let the tokenization trend play out in the years ahead. But there is another option, a way to see a tax-free return from ether and other digital assets.

It has to do with a cryptocurrency IRA. And for investors who don’t want to worry about private keys, backup phrases, or buying and selling digital assets themselves, this is the best option I’ve found. You can go right here to get all the details.

Regards,

Jeff BrownEditor, The Near Future Report

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