Introduction:

When the friction involved in using a product or service drops below a critical threshold, adoption accelerates dramatically. This phenomenon has repeated across technological and financial innovations—and understanding it is key to predicting the next wave of transformation.

Case Studies:

Photography, Digital Photography and Phone Cameras

Photography once required a dedicated camera, a concept that may be difficult to imagine in the current era of ubiquitous phone cameras.

Initially, phone cameras were less capable (sub-1MP cameras were common); however, the principle that the most effective camera is the one readily available proved critical. 

Subsequently, phone cameras surpassed commercial digital cameras in capability, leading to an exponential increase in the number of photos taken annually. This phenomenon occurred precisely because of the unprecedented ease of accessing a camera when needed.

Stablecoins and frictionless movement of money, esp. USD

Moving money, especially across international borders, has historically presented a significant challenge.

As a person who spent most of his life in India, I personally know that the ability of transferring USD to some other country needs superhuman effort.

Stablecoins solved this problem by making a fiat currency, a crypto asset that can move across crypto rails without the restriction of geographic boundaries, and 24x7. The impact of this reduction in friction has been explosive.

Examining the transaction volume rather than merely the market capitalization reveals even more compelling insights:

These significant shifts have occurred just over the past four years. All this happened because USD could be moved 24x7, across any regions, and largely permission-less (no weekends, no bank holidays, no red-tape)

Real World Asset (RWA) Tokenization

Tokenization is the process of creating digital representations of assets, either as a whole or fractionalized into multiple units (known as tokens), thereby enabling the free movement of these tokens on blockchain networks (subject to constraints). RWA Tokenization is the process of creating a tokenized representation of a variety of real world assets like real-estate, credit, carbon credits, etc and reducing their friction of access and movement. 

While the movement of money is significantly facilitated by Stablecoins (tokenized currency), this movement is fundamentally driven by the transfer of underlying value, not merely transactional activity

While a house as a real-estate asset is illiquid, a tokenized representation of the house can be immediately used as a collateral to borrow money when the infrastructure supports this. Reducing friction of access and transfer lends these assets to actively participate in the economy. 

By tokenizing these assets we onboard a 100 Trillion USD economy on-chain and using Stablecoins as a medium of value transfer, we can move this huge economy on-chain, leading to exponential value creation. 

Stripe, as per its mission to increase the GDP of the internet started this process by making money move across the internet. But, by unlocking a 100 Trillion USD worth of assets and kickstarting the token economy, RWA Tokenization will enable the next exponential growth of exploding the GDP of the internet making it the next big success for the web3 economy (after Stablecoins).