You've probably seen headlines about betting markets exploding. Here's what's actually happening, and the surprising link between betting on elections now and getting a crypto-backed mortgage down the track.
Jump to:
The basics: crypto, stablecoins, and blockchain
What is a cryptocurrency?
A cryptocurrency is a digital currency that people trade, buy, hold, and sell like they do actual dollars. People use cryptocurrency because it's decentralised finance (DeFi), which means, a financial system where users can borrow, lend, trade, invest and make payments near-instantly without intervention from banks or governments thanks to digital technology such as blockchain. Crypto has many use cases but the most popular is as a store of value that can grow over time.
The best known cryptocurrency is Bitcoin.
What is a stablecoin?
When you think of crypto you might think of wild swings, overnight millionaires, and morning after bankruptcies. But it's not all like that.
A stablecoin is a crypto coin that is engineered to be 'stable', that is, not exhibit the volatility of more traditional cryptocoins. Stablecoins stay stable because they're 'pegged' to underlying assets. This means that they're designed to mimic the value of a more traditional store of value such as a physical currency or commodity such as a gold bar.
The best known stablecoin is called Tether, and it's designed to maintain 1:1 value with the US Dollar. In Tether's case, an individual or firm who wants to buy Tether deposits US dollars into Tether's bank account, and receives Tether back minus fees. They can then use that Tether to buy, sell, or transact with other users, or convert it back to a physical currency (known as a fiat currency).
Meanwhile, Tether itself uses the deposits to make investments and maintain its 1:1 backing.
How are cryptocurrencies and stablecoins linked?
Stablecoins are widely used as the settlement currency in crypto markets. They function as the crypto equivalent of cash or USD rails.
So now we know what cryptocurrencies and stablecoins are. Essentially, they're ways that people and companies can conduct business online by cutting out the traditional time and institutions involved when making payments, especially across borders.
So what's a smart contract?
Stay with us.
A smart contract is an automated program on the blockchain that performs an action when specific rules are met. It records this on the blockchain, which is a decentralised payment ledger that people can see but not edit, so it's seen as a 'source of truth'.
Explain the blockchain like I'm five?
It's literally a chain of digital blocks. Each block is made up of a bunch of transaction data. When new blocks get added, they get locked into place and change the ones behind and in front of them, securing them with cryptography, which is encryption. This means that the data can't be edited or deleted. It sounds tricky, but websites such as etherscan give you a better way to visualise it.
Then what is tokenisation?
One more step.
Tokenisation is when an individual or business that owns something illiquid, such as a building, painting, collectables or other assets, sells digital shares of it on the blockchain.
For example, tokenised stocks are offered by licensed financial providers who buy the asset, then release its tokenised equivalent on the blockchain for individuals to buy and sell.
NVIDIA is available as a tokenised stock, for example.
This means traders can buy and sell it at any time instead of having to wait for the market to open. Transaction costs and settlement times can also be a lot lower, though as with any emerging technology, risks such as regulatory uncertainty remain.
How's all this linked to betting on the election?
So, tokenisation and stablecoins find efficiencies in traditionally slow or illiquid processes and markets, such as real estate, private credit, and funds transfer. By cutting out the middlepeople, both buyer and seller can save a lot of money, potentially raising the value of each. They also help open up markets by offering fractional amounts of hard-to-get assets to people who otherwise couldn't access them.
This brings us to prediction markets.
For ages, if you wanted to place a bet on a game, you had to find someone who offered it, take their odds, use your cash and then wait for them to certify your bet and pay you out.
That's if it was even legal for you: in the US, there are 11 states where it's illegal to bet on sporting matches.
Now, thanks to the above, betting on events has been streamlined to the following:
Let's say someone wants to bet on the mid-terms
The mid-terms are the halfway point in a US President's term when the American people get to vote on who controls congress. They're not until November. Their system is a lot different to ours.
Online betting company Polymarket is illegal to use in Australia, so we're just using it as an example. In the US it's already offering odds on their November election. Polymarket acts as a decentralised platform that makes money from facilitating the bets people want to make and then collecting transaction fees.
At Polymarket, users buy a 'share' in the outcome of the election, and that share is tokenised and visible on the blockchain. They trade directly with other users through smart contracts which get exercised when the outcome of the election is decided. The rules are stated upfront so everyone knows what they're in for.
How else is tokenisation being used?
Outside of prediction markets, tokenisation and stablecoins are transforming the 2026 economy:
- Real-World Assets (RWA): As at 3 February 2026, over $9 billion is now invested in tokenised U.S. Treasuries — up from under $4 billion at the start of 2025 — allowing investors to earn "on-chain" yield from government bonds.
- Corporate Treasury: Multinational companies now use stablecoins for same day liquidity, moving millions of dollars between global offices in seconds instead of days.
- Fractional Real Estate: Investors can now buy $100 worth of a commercial office building in Sydney or London using tokenised shares.
- Home loans: Some lenders are experimenting with crypto-backed mortgages, where borrowers use cryptocurrency as collateral instead of a traditional deposit. And tokenisation could eventually streamline the entire settlement process — verification, contracts, transfers — cutting weeks down to minutes.
So... bullish or bearish?
The Spaceship Universe and Spaceship Earth portfolios invest in companies we think are where the world is going, and are listed on stock exchanges. We've been keeping an eye on the tokenisation trend, which is part of the Fintech Where the World is Going trend.
🐂 The bull case
A common bull case for tokenisation is that it expands the investing addressable market by tokenising assets beyond equities (bonds, credit, real estate, private markets, commodities, funds) enabling fractional ownership.
Stablecoins are also an emerging global payments infrastructure, and prediction markets could evolve into macro hedging and insurance-like products.
🐻 The bear case
For us, the bear case includes that open tokenisation standards may lead to commoditisation, reducing product differentiation and long-term value creation for distributors. Regulatory uncertainty, and potential competition from central banks and existing financial providers could dampen the landscape too.
The real outcome is likely to land somewhere in the middle. And if we wanted to put a bet on it, we could now do it in token form paid for with a stablecoin and executed by a smart contract.
