Kevin Miao explains a very real crypto use case: fixing the $14T securitization market
Really appreciate this insightful and well-written essay. Thanks so much!
Very informative. Will likely need to read this one a few times to fully understand the concepts presented.
Very informative article. Look forward to great pieces like this in the future. Thanks
Bravo guys! This piece was very well written IMHO because it put a big microscope on the problem before talking about the solution. The Bezos advice at the beginning & your advice about taking things in small steps at the end (like building legos if you think about it simply) resonates with me & should with all those building Web3 projects. One battle a war does not win, but an accumulation of them does. THX AGAIN! :0)
Great essay! And I've been infinitely sympathetic to the fact that reducing paperwork is cryptos big utility unlock ...
As the author admits himself, most of what he discusses could be done off blockchain. There is very little blockchain adds of true value here, and adds the risk of a new technology. I used to work in CMBS, and am very familiar with the system and its inefficiencies. Even sketched out a business plan in 2012 on how software (not blockchain!) could make the whole thing a lot more efficient. This is just one of a hundred examples of business processes that are still done relatively inefficiently and eventually will be made better by software. But the gains are fairly marginal (his estimates of savings are very high IMO unless he is saying its 100 bps over the lifetime of a deal, aka 10 bps/year)) and incentive structure is such that its hard to make a change (hence why it hasn't occurred already). But this hardly is a bull case for bitcoin or ethereum.
Great post. Question I have: In the example cited, $35B of savings on $14T. Those are big numbers. But, is the marginal revenue of $35B greater than the marginal cost to move to the new system? I think we have to get there for it to move.
Good piece!! thank you sir
Amazing, thanks for writing this
"It will take a decade, or longer, to achieve."
Honestly, that's all I take from this article.
Great article! Details are the core.
Efficiency tends to win. Thanks for putting this together. When I first started looking at crypto several years ago, the trading aspect was kind of "meh". No idea how to put a value on this thing so interest was limited. When pressed to look deeper into it, blockchain blew me away. It was clear from the get-go that efficiencies offered by blockchain were a game-changer for middle and back offices in capital markets.
Yes, but why do you need a blockchain? The problems you describe need to be addressed by:
a. A functioning market (standardized contracts and liquidity), and
b. More efficient execution (standardized services, fewer middlemen, etc.)
You can implement both with regular software applications (e.g. think commodity futures contracts).
What specific advantage does distributed consensus [the essence of blockchain] bring? Otherwise it’s just a slow, expensive, non-scalable database that’s replicated at each location instead of using a run of the mill distributed database.
Another great piece Packy.
Your comment on getting the right answer by putting the wrong answer out there reminds me of techniques used in the intelligence community.
Here's a great little brochure from the FBI on the technique. Notice the point on deliberately putting out incorrect information so that the target is tempted to correct you:
Valuable insights! But the questions remains for me why the solution to solve the inefficiencies and improve securization must be blockchain based? Why can’t just a clever designed SaaS solution automate and digitize the process of securization and connect all participants on a single plattform?
Great article. for a non finance person who knows shit about securities and lending it really helps me understand. Would be great to go one step deeper with an article about the pros and cons of decentralizing the documents tied to these securities/mortgages like house and land deeds, car titles, etc. i think this is a better low hanging fruit which could be the catalyst in pushing these ideas forward. start in crypto friendly locations like miami. move all the title documents on chain and see what happens. at a minimum we get a way to do it. (which could also be used further for other types of moving already public information onto the blockchain)