How Blockchain Can Break the Vicious Cycle of Income Inequality in 2019 By Gov Van Ek

By Gov van Ek, Co-founder of BitCar.io, a blockchain-based platform.

Alongside immense growth and development of technology, the tech start-up boom has created thousands of jobs and boosted economies while at the same time enlarging an already strong divide among the super-rich and everyone else. In addition to taking over Silicon Valley, tech companies have continued to expand in Los Angeles, Denver, New York City, and Austin, to name a few.

Residents are being displaced in such cities where these large, money-backed companies are moving in because they simply can’t afford to live in the neighbourhoods they’ve perhaps occupied for decades. But this inequality issue doesn’t stop with housing. The nationwide growing socio-economic gap is preventing most of the population from being able to purchase valuable assets that tend to appreciate in value over time such as fine art, exotic cars, and more.

Unfortunately, the longer this inequality continues, the more the economy as a whole will suffer due to a lack of opportunities for the majority of the population to participate in the investment returns garnered from inaccessible, high-performing assets.

The reality of this deepening divide highlights a need for a solution. Blockchain technology can break the vicious cycle of income inequality by enabling fractional ownership of high-performing asset classes, providing opportunities for anyone to invest and partially own expensive assets.

The current sharing economy is a start, but insufficient

Over the past decade, the sharing economy driven by tech giants, such as Uber, Airbnb, and others, has taken hold. Users of these apps are after high-quality services and experiences at affordable prices. As Ben Lee stated in Forbes, “The technology driving the sharing economy is actually fueling a change in something much more fundamental: the concept of ownership itself.”

As the top one percent continues to possess the ability to fully own high-valued assets, the rest of the world is only able to share similar experiences with perhaps the hopes of owning an expensive car or apartment to one day to reap the same benefits as owning. The downside of the current sharing economy model is the fact that the real beneficiaries are the tech giant intermediaries, the middlemen, who collect fees on every transaction.

Airbnb hosts and Uber drivers are not necessarily making more money than the taxi drivers and hoteliers of old. Furthermore, Uber drivers and Airbnb hosts lack the benefits associated with being a salaried employee. Health care and saving for retirement is on each individual. This reality sheds light on the need for a game-changing technology to step in.

Where do we go from here?

The technology that allows average Joes and Janes to be able to invest in the highest performing assets classes, such as classic cars, commercial real estate, and other collectables, will be the transformative force the sharing economy requires. These assets have been proven to garner returns for investors over time and represent opportunities for wealth generation that were not historically accessible to the majority of people. That is until now with the development of fractional asset ownership enabled by tokenization. Blockchain technology forms the foundation for the next version of the sharing economy, which could be even better for regular people because of the opportunities for investment.

Tokenizing real-world assets like cars, real estate, and art, will enable those outside of the one percent to take part in this high-valued asset economy, which is crucial for the health of the economy overall. In a recent Nasdaq article, Peter Daisyme stated, “ownership is an important concept in a thriving economy, giving people the chance to grow their wealth by buying and holding assets.” We are living in the perfect time to introduce new technology to assist more people in participating in such growth opportunities.

Real estate comprises an asset class that tends to appreciate in value over time, but one that is not easy to buy into. By enabling fractional ownership, the market can be open to all, allowing anyone to get a slice of the pie regardless of net worth. Similar to other assets such as exotic cars, fine art, wine, and jewellery, people can now take part and invest their money into assets that will continue to grow in value over time.

All in all

By applying blockchain technology’s capabilities for fractional ownership to value asset classes, we can bring about an upgraded version of the current sharing economy; one that works for everyone and not just the 1%. As this fractional ownership model can be utilized for any real-world asset, blockchain technology is the solution we need that will help boost economies and solve investment inequalities.

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