I’ve had a revelation,
I don’t think it is a hallucination.
It has to do with digitalization.
I now have a fascination,
With tokenization.
Dear Reader, I’ve been in Palm Beach for the past five months. When the notorious (and very colorful) bank robber Willie Sutton was asked why he robbed banks, he replied, “Because that’s where the money is.” There’s a lot of money in Palm Beach, but even more importantly, at least for me, there are a lot of interesting, highly innovative people here. As is always the case, combine healthy amounts of capital with smart, creative people and the result will be transformational capitalism.
Full disclosure: I’ve been asked to participate in, and am participating in, a number of projects at the epicenter of AI and digital currency. This is a world I knew very little about in 2025, but I feel like the Apollo astronauts surely felt in the late ’60s on the cusp of the moon landing. I’m involved in something BIG. Epic, world-changing, transformational stuff. Compared to my compatriots, I’m just an ole hayseed who once did financial return calculations on an HP-12C. Every night I study and learn what others have been doing for the last 10 years, but now the smoky cloudiness in my crystal ball has dissipated and, like Merlin, I can not only peer into the future, I can see it in 3-D Technicolor.
Dear Reader, don’t be a Malthusian, anti-growth, tinfoil-hat Luddite! Join the happy-warrior Smith team, along with my Scottish cousin Adam! Data centers, AI, digital currency, and other elements of creative destruction are nothing to fear. As the second-smartest Smith in the history of the world taught us, “The division of labour… gives occasion to the invention of machines which facilitate and abridge labour.” In modern parlance, capitalism continuously destroys less productive labor and reallocates people, capital, and talent into more productive activities that create and then satisfy market needs, but also creates massive new wealth and drastically raise living standards and opportunities for all.
So, folks, throw away your buggy whips and listen to Rob and Adam, aka the Smith Boys. Financial markets are about to be revolutionized — becoming less costly, more efficient, and much more democratic. All of this is going to be good. Let me tell you about tokenization.
Right now, all the assets you own are represented by some sort of instrument — either a share of stock, an LLC membership interest, a deed, or a debt instrument that reflects what you are owed. When assets are tokenized, whether a gold mining business or a building leased to a McDonald’s, these expressions of ownership will be represented in the form of a “token.” A token is not a traditional “coin” or piece of metal. Rather, it represents some form of ownership in (or obligation of) an asset and its productivity.
Just like any other financial instrument, tokens are subject to governing documents. These documents exist on the blockchain and can consist of all the legal instruments that an investor would normally have in the non-token world, such as operating agreements with voting rights, token-holder remedies, security agreements, preferred and non-preferred returns — whatever exists in the non-token world can be part of tokenized financing.
What is a blockchain? How is it different from the internet’s existing client-server architecture? A blockchain is a decentralized digital ledger that records transactions in chronological “blocks” that are cryptographically linked together and shared across many computers. It has never been hacked and is extremely secure. The information is not stored in any one place like our current internet-based system.
Remember when Captain Kirk was on a distant planet and Scotty would beam him back to the Enterprise? That’s a good visual of how it works. A million nodes come from all over the “galaxy” to certify information that scrambles together to form blocks of data. Records are immutable, extremely reliable, and can be 100% transparent to the token holder.
For any tokenized deal, an AI smart contract can operate to administer all elements of financial reporting, income distribution, liquidation, etc., such that very little human intervention is needed to serve the needs of the token holder. Tokens can only be used on the blockchain.
Tokenization is not some sleazy end-run around the traditional banking system for illicit or secret activities, but it is an “end-run” implemented to avoid the myriad inefficiencies and costs embedded in our current banking and legal systems.
Tokenization increases liquidity. Ownership is transferred into fractional (very small) interests that can be traded over a smartphone in less than a second. There are no investment minimums and access to capital is greatly enhanced. Many assets are highly illiquid — commercial real estate, for instance. The costs to produce a sale or capital raise are not only extremely expensive, but often cost-prohibitive. Tokenization “liquidizes” an illiquid asset.
Traditional finance is heavily constrained by banking hours, settlement systems, intermediaries, and national borders. Not so with tokenization, which allows for near-instant settlement, continuous trading, global participation, and programmable compliance.
When one thinks of traditional finance, these images come to mind: lawyers (we all hate them), unnecessary bank fees driven by overregulation, accountants, obtuse bankers, brokers, custodians, transfer agents, clearinghouses, escrow agents, and miles of red tape that can not only tie up a transaction for months, but kill it entirely. Tokenization automates most, if not all, of these functions through smart contracts, shared ledgers, and programmable transfers.
Previously thorny and cumbersome issues — like assets pledged as collateral — can be transferred, verified, and reused far faster and more efficiently on a blockchain. Commercial activity runs 24/7, and the blockchain allows for near real-time verification of an asset: who owns it, whether it is pledged, whether it has been transferred, etc.
This democratization of markets can be accessed through centralized exchanges (CEXs) like Coinbase, and if the tokenization is structured properly, the CEX will maintain customer records and handle reporting to the IRS. The token holder trades and monitors his account through an electronic wallet.
Remember the spirit medium Oda Mae Brown from the movie Ghost? I recently contacted her to get in touch with the world’s second-smartest Smith to ask his views on tokenization. Here’s what he had to say:
“I absolutely applaud tokenization. All growth, all rising tides that lift all boats, all civilizational advancement emanates from the division of labor (enhanced technology and increased productivity) and the plentiful and efficient supply of worldwide capital.” — Adam Smith, May 24, 2026
