The math does not add up and the logic is not sound. That could be the summary of the current AI bubble. If that is true and AI does not deliver on its promise, what could the massive build-up of data centers be used for?
Enter the tokenization of the economy: the process by which legal ownership rights to real-world assets (RWAs), commodities, and currencies are converted into blockchain-based digital tokens. In theory, this allows for more efficient, instantaneous, and secure global trade. In practice, it’s a transformation of the way the economy works by merging finance and digital technologies.
Tokenization enables the financialization of almost anything that exists, turning passive physical realities into highly liquid, speculative instruments. You may tokenize a property title or a future crop, but also part of an artwork or a fraction of a worker’s shift. It enables the speculative economy, which is based on financial instruments and not on trade or production, to continue expanding. This is one reason why financial institutions are backing this transformation.
Tokenization adds a new ledger to the economy. The banking system introduced a structural ledger into every transaction through the use of fiat currency. A transaction was no longer just a deal between two parties; there was always a third party—the banks, which controlled the currency that the state imposed. Because money ceased to be an asset in itself, those who controlled the currency had a ledger of control over the entire economy.
Tokenization proposes that it will reduce the number of hidden ledgers (private banks, clearing houses, or the central bank), but these could be considered all part of one structural ledger: the fiat ledger. Initially, tokenization will add a second structural ledger: the asset token or the cash token. In a transaction between two parties, they will use fiat (the first ledger) in order to trade a token (the second ledger). This is the reason why technology companies are backing this transformation. They will essentially have become an indispensable part of the financial system.
Eventually, when CBDCs or stablecoins substitute for fiat, both ledgers will be merged into one. This will mean that the financial class and the technocratic class have merged into one. For the rest of us, it will mean that the nature of money will have changed. Fiat currency holds a nominal value, even if not an intrinsic one, meaning that a one-dollar bill is tangible and anonymous, independent of the issuer once issued (excluding inflation). CBDCs and stablecoins are not. They are programmable money, which means they can be programmed to behave in accordance with the wishes of those who control them. That is why states are backing this transformation.
This process is ongoing. According to the Boston Consulting Group, in less than a decade, asset tokenization is expected to exceed $16 trillion and represent 10% of global GDP by 2030. The World Economic Forum was more optimistic; it predicted that the 10% threshold would be reached by 2027. Independent analysts, like Patrick Wood, expect this process to be accelerated due to a combination of factors.
In an article titled “An Assessment of the Accelerating Timeline for ‘You Will Own Nothing’,” Wood argues that AI acceleration, the technocratic capture of the legislature, the explosion of data centers, the Pax Silica, the federal wrapper around state law, and the BIS “whip” (meaning that the agreed adoption by a number of banking and financial institutions will force others to do the same) have created the conditions for the continuous acceleration of the tokenization process.
However, the tokenization of the economy does not happen in a vacuum. Every token and every tokenized transaction requires both data storage and computing power. Unlike a decentralized blockchain, such as Bitcoin, ensuring control of the tokenization process and full surveillance capabilities requires that storage and computing capabilities be accessible only by approved entities. That means that the ledger will be distributed through many data centers around the world, but only entities such as central banks, cleared private banks, or tech providers will be able to run the nodes that validate transactions.
When every single transaction in and across multiple countries—whether buying bread or paying for a house—is tokenized and settled almost instantaneously, the amount of information and computing power required reaches industrial data server capacity. But if you add to that the capability to control and monitor those processes through algorithmic intelligence, then what you might need in terms of computing power and data storage might be similar to the data center build-up that we are currently seeing.
I am no expert in either AI or tokenization, but I do know that the computing and storage requirements for each are not the same (with AI relying on GPUs versus tokenization relying on CPUs). However, what I’m trying to argue is not that the current AI infrastructure can be immediately used for tokenization, but that a fully tokenized economy combined with identity-linked transaction data, cross-border interoperability and machine-learning-based monitoring would require infrastructure closer to large-scale AI/data-analytics systems than to a simple payment ledger.
I asked an LLM (Gemini) about this—first, because I was curious to know the answer it would give, and second, because I wanted to know if it technically made sense beyond my coarse understanding. Of course, the response is not conclusive, and some readers might argue the opposite.
The question was simple: can the current build-up of data centers be used to store and process the tokenization of the economy? After providing information on the technical differences, the summary was conclusive:
“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 coul be useful to store, process, and secure the trillions of dollars expected to migrate into tokenized assets over the coming decade.”
Tokenization is a compelling use case. If current LLM models do not lead to AGI simply by multiplying computing power—which seems to be the logic behind the data center build-up—then AI companies will have a difficult time justifying the expenditure under current use cases. If that is the case, then the tokenization process, and its monitoring through costly, newly developed AI models, could use that same infrastructure.
I understand this is a hypothetical situation, but I think it is one that makes sense out of the seemingly senseless, massive data center build-up happening under the AI narrative. I am not necessarily saying that the tokenization and monitoring of the economy was the original intention for the data centers, but perhaps it is one that is considered if LLM models fail to deliver on their promises.
Another possible use case for the data centers, which is related to the programmability of CBDCs and stablecoins, is surveillance. Current modes of surveillance—digital, monetary, communicative, or locational—are compartmentalized. A private technology company might know your online behavior, another your banking history, and another might track your movements. However, if you pull all this information together and deploy algorithmic intelligence—which is what Palantir, among other companies, does—the possibilities grow exponentially. When you pair that with monitored financial behavior, then the full possibilities of programmable money become apparent.
It is possible that, as happened before during the telecom bubble, the use cases that will inherit the current data center infrastructure will be different from those it was allegedly built for. I don’t think it is difficult to see how the current AI bubble could bequeath a technology and infrastructure that will lead to a fundamentally different society, because the nature of what we call money will have changed and the surveillance capabilities of the state will have greatly increased.
The question then might be: could that not have been the purpose all along, and the rest just the necessary narrative to hide it?
Imagine trying to justify spending billions—many of which come from financial institutions and state funding through contracts—and placing a massive strain on energy and water resources to build up data centers at the current capacity, solely with the purpose of tokenizing the economy, implementing CBDCs, and enabling AI monitoring. There would be great resistance. However, if it is done with the promise of building some type of utopian future, then that resistance might be neutralized. At least for those who believe it.
