Traditional asset ownership is recorded in static database systems from the 1970s. Tokenization represents a fundamental upgrade, transforming assets into interactive software (smart contracts). This allows for programmability, 24/7 settlement, and new forms of permissionless innovation that are impossible with legacy infrastructure.

The convergence of AI and Distributed Ledger Technology (DLT) is setting the stage for a 'liquidity explosion.' This will enable the tokenization of previously untradeable, fragmented assets like specific plastics or downstream LNG hubs, creating entirely new markets.

JPMorgan's Scott Lucas argues that tokenization's most profound impact is not just making existing processes faster or cheaper. It's about fundamentally redesigning financial instruments—like paying bond coupons by the millisecond—which could open up debt capital markets to smaller companies that cannot access them today.

The most compelling reason for institutions to adopt blockchain is the new functionality it gives issuers. They can programmatically reward long-term holders or pay dividends in stablecoins—capabilities impossible with current "Russian doll" ownership structures.

The key to tokenization is combining two worlds: traditional finance's expertise in legally custodying assets, and crypto's native, free infrastructure for 24/7 trading and liquidity. This fusion makes it possible to make previously untradable assets like private equity, art, or collectibles instantly liquid and accessible.

Instead of funding another stablecoin protocol, the more viable investment is in the tooling layer. This includes payment systems, SDKs, and accounting software (like triple-entry bookkeeping) that enable small businesses globally to integrate stablecoin payments into their existing fiat workflows.

Jeremy Allaire compares blockchain's evolution to the early internet. After more than a decade of foundational work and slow progress, the infrastructure is finally mature enough to be broadly useful—similar to how broadband unlocked the internet's true potential. The demands of the new "agentic economy" are providing the catalyst for this inflection point.

Square views its role as taking complex technology, from financial tools to AI, that is usually only accessible to large corporations and making it simple and available to small businesses. The ultimate goal is to improve their survival rate and help revitalize local economies.

The market for buying and selling small businesses is currently opaque and inaccessible to the average person. In the future, these businesses will become more commoditized and tradable, much like how real estate investing and flipping have been democratized over time.