In today’s rapidly evolving technological landscape, the conversation around artificial intelligence (AI) and its economic implications raises significant questions. Many speculate that the current hype surrounding AI may not culminate in the expected breakthroughs. If AI fails to fulfill its promises, what will become of the vast network of data centers that have been established?
The solution may lie in the tokenization of the economy. This process involves converting legal ownership rights of real-world assets (RWAs), commodities, and currencies into blockchain-based digital tokens. Theoretically, this transition could streamline global trade by enhancing efficiency, speed, and security. In practice, it represents a significant evolution in the economic landscape, merging financial systems with digital technologies.
Tokenization has the potential to financialize nearly any tangible asset, transforming physical goods into speculative, highly liquid instruments. For instance, one could tokenize a property deed, a future harvest, or even a portion of an artwork or a worker’s shift. As a result, the speculative economy—which thrives on financial instruments rather than traditional trade or production—continues to expand, attracting the support of many financial institutions.
This shift introduces a new ledger system within our economy. Traditionally, the banking system has acted as a structural ledger, recording transactions through fiat currency. Each transaction was not merely an exchange between two parties but involved a third party—the banks that governed the state-mandated currency. Since money is no longer an intrinsic asset, those who oversee the currency maintain a ledger of influence over the entire economy.
Tokenization aims to reduce the number of concealed ledgers—such as those held by private banks or clearing houses—but these can still be viewed as aspects of a singular structural ledger: the fiat ledger. Initially, tokenization introduces a second structural ledger: either an asset token or a cash token. This means that in transactions, fiat (the first ledger) would be utilized to trade a token (the second ledger). This is precisely why technology firms are advocating for such a transformation; they are poised to become integral to the financial architecture.
Over time, as Central Bank Digital Currencies (CBDCs) and stablecoins replace fiat, both ledgers may eventually converge into one. For the financial and technocratic elite, this merger signifies unity, while for the average individual, it represents a fundamental shift in the nature of money. Unlike fiat currency, which possesses a nominal value independent of its issuer, CBDCs and stablecoins are programmable. Their behavior can be dictated by their controllers, thereby underscoring the reasons behind state support for this transformation.
This evolution is already underway. According to the Boston Consulting Group, asset tokenization could surpass $16 trillion and constitute 10% of global GDP by 2030. The World Economic Forum predicts that the 10% mark may be reached by 2027. Independent analysts, including Patrick Wood, expect the process to accelerate due to multiple converging factors.
In a piece titled “An Assessment of the Accelerating Timeline for ‘You Will Own Nothing’,” Wood contends that the rapid advancement of AI, legislative intervention, increased data center investments, and the influence of the Bank for International Settlements (BIS) have all contributed to speeding up this trend of tokenization.
However, it’s important to note that the tokenization process is not occurring in isolation. Each token and transaction demands significant data storage and computational power. Unlike decentralized systems like Bitcoin, which thrive on widespread access, controlling the tokenization process and enabling comprehensive surveillance necessitates restricting access to storage and computing capabilities to select entities. Consequently, while the ledger may be distributed across various data centers globally, only central banks, authorized private banks, or tech providers may operate the nodes necessary to validate transactions.
When every transaction across multiple nations—from purchasing groceries to buying property—is tokenized and settled almost instantaneously, vast amounts of computing power and information storage will be needed. Additionally, if algorithmic intelligence is employed to monitor these processes, the required infrastructure may mirror the extensive setups currently being developed for AI data centers.
While I may not be an authority on AI or tokenization, I recognize that the computational and storage requirements for each differ. AI systems predominantly depend on GPUs, whereas tokenization leans on CPUs. My assertion is not that the existing AI infrastructure is directly applicable to tokenization, but a fully realized tokenized economy—complete with identity-linked data, cross-border capabilities, and machine-learning oversight—would necessitate a setup akin to large-scale data analytics systems rather than a straightforward payment ledger.
In seeking clarity, I consulted an LLM (Gemini) regarding whether the current data center expansion could support the tokenization of the economy. After outlining the technical disparities, the conclusion was straightforward:
“The data center boom is laying the physical tracks for a completely digital financial system. While today’s massive capital expenditure is largely driven by AI, the resulting global footprint of high-security, high-bandwidth server farms could be useful to store, process, and secure the trillions of dollars expected to migrate into tokenized assets over the coming decade.”
Tokenization presents a compelling case for leveraging existing infrastructure. If current LLM advancements do not lead to artificial general intelligence through sheer computational increases—with the rationale behind the current data center expansion—AI companies may find it challenging to justify their expenditures under the current applications. If this proves accurate, the tokenization endeavor, along with its oversight through advanced AI monitoring, could adapt to utilize the same infrastructure.
While this analysis is speculative, it offers a rationale for the enormous data center growth presently under the AI narrative. I do not necessarily claim that the original goal for these centers was the tokenization and monitoring of the economy, but this rationale may emerge if LLM models do not meet their anticipated outcomes.
Another potential application related to the programmability of CBDCs and stablecoins is surveillance. Current surveillance methods—whether digital, financial, communicative, or locational—often operate in silos. One company may track your online habits, another your financial transactions, and yet another your movements. However, combining this data with algorithmic intelligence, similar to what companies like Palantir are doing, exponentially increases potential outcomes. When this is paired with monitored financial behaviors, the extensive capabilities of programmable money become evident.
As witnessed during the telecom bubble, the infrastructure that evolves from the current data center investments may diverge from its originally intended applications. The possibility that the current AI bubble could provide technology and systems that fundamentally transform society is clear. The essence of what we define as money will shift, and state surveillance capacity will expand significantly.
This leads to a critical question: was this not the overarching objective all along, with the rest serving as a necessary narrative to disguise it?
Imagine attempting to explain the rationale behind spending billions—funded by financial institutions and government contracts—while dramatically taxing energy and water resources to construct data centers at such scale, solely for the sake of tokenizing the economy, implementing CBDCs, and facilitating AI monitoring. Such resistance would likely arise. However, framing it as a step toward a utopian future could quell opposition, particularly among those who buy into the vision.
