Financial Engineering Is Older Than Crypto

This post originally appeared in Money Stuff.

A basic thing to understand about crypto and tokens and blockchain is that financial engineering existed for a long time, and reached a high degree of sophistication, before anyone came along and invented blockchains. For instance, many crypto enthusiasts might be too young to remember this, but in the early and middle years of the last decade quite a few people made quite a lot of money doing something called “securitization,” which means turning all sorts of previously non-tradeable economic claims — mortgages, say, or credit card debt — into tradeable securities that people could buy or sell with relative ease. Parts of that worked out poorly, but the basic concept seems sound and there is still quite a lot of securitization today.