There is an exchange based in Estonia which is called the DX Exchange and they are launching shares of Nasdaq companies on their digital asset exchange today, January 7th, 2019.
DX Exchange is launching with the listing of traditional securities such as Apple, Tesla, Amazon and 7 other Nasdaq listed securities in the format of tokenized shares with plans to expand its offering in the near future.
This is absolutely huge for the blockchain space, and eventually EOS, once the word gets out to mainstream that it’s the most scaleable, agile, and used blockchain in the crytpocurrency space. I shared this with a good friend of mine when he called to get information regarding cryptocurrency and he asked me the following question:
“What does this (having digital securities) mean and why is it important?”
As a result of him not being in the cryptocurrency and blockchain space, I didn’t have the energy to retort to his question. It was a bigger bite than I was willing to chew at the moment. However, that question sparked the inspiration for this blog post.
So, why is this news of the tokenization of traditional securities (i.e. security tokens) being backed, 1 to 1 of a regular share so huge?
The initial thing that stands out to me is that, this will provide the ability to track interest from investors utilizing blockchain technology to determine the demand for products that can improve traditional financial markets. These investment products listed on the DX Exchange will be controlled by DX Exchanges partner company MPS MarketPlace Securities LTD. The Ethereum network is the blockchain on which these tokenized securities will be based. Ownership of these tokens will also provide holders with the same cash dividend which is also a big plus, being as though the companies themselves aren’t involved.
This is important in my opinion because the interest and demand driven by investors to the DX Exchange will show traditional marketplaces and companies that there is a demand for these types of products. Jeff Bezos is possibly, currently unaware of why shares of Amazon should be security tokens on a blockchain. A healthy demand from investors will bring his attention to that need.
Based on the DX Exchange and MPS MarketPlace Securities LTD partnership, currently this implies an intermediary between the Ethereum Blockchain (Trustless) and you. However, in the future this will not be the case. The security tokens (tokenized shares) will eventually be endemic and launched by Nasdaq, NYSE, S&P 500 companies etc. on the blockchain directly.
Security Tokens on a blockchain provide several advantages over ordinary shares from traditional markets. Some of which are identified below:
1. 24/7/365 anyone can buy or sell GLOBALLY. Currently can only do so on a national scale. As you could imagine this greatly increases the availability and demand for your companies stock (tokenized shares).
2. The ability to purchase fractional shares. Unlike traditional stock markets where you have to purchase all or nothing of a share, tokenized securities allow you to purchase parts of a share. Instead of buying an entire share of Amazon at $2,000 USD, you can purchase a 16th of a share for $125 USD. Which is much more enticing and affordable to your typical retail investor.
3. The ability for essentially instant settlements from one token to USD for example or from selling an Apple security token for the purchase of a Tesla security token, without the need to go back into USD first. Currently you sell your shares of Apple and wait for the settlement of USD to occur which takes 3 days. Only after the settlement of those funds occur can you then use those funds to purchase shares of another company.
Immediately, it’s pretty obvious that these are pretty significant benefits to investors. The possible benefits to the companies I haven’t even identified here, keep that in mind. There’s zero doubt in my mind that these are a few of the many advantages that blockchain technology provides. As demand for these products are shown, more and more of these types of products will come about. This is the first step of many to follow.
I’ll sum this up here, as I hope I’ve began to paint a vivid enough picture on where I believe this all is headed. Further connecting the dots to a point where the road meets the pavement, unlike our past time where the internet was this new, big, shiny thing that no one really understood in the early/mid 90s (i.e. Today Show, “What is Internet, Anyway?”). Blockchain technology provides a similar but larger opportunity and if you’re paying attention, it has the same energy around it. Soon you’ll hear people, if you haven’t already stating “What is Blockchain, Anyway?”
Hint: Retail investors (typical 9 to 5’ ers), couldn’t invest in “the internet” directly, nor an accredited investor (net worth exceeding $1 million or income that is above 200K annually, typically). However, accredited investors had the opportunity to invest in applications/websites (i.e. pets.com, amazon.com, aol.com, etc.) built on top of “the internet” during that time period (before it was available to retail investors). Well, retail investors can invest in “the blockchain”, now. Investors or interested parties can learn about, purchase, hold, and or use Ethereum, EOS, Cardano, Tron, etc. in an attempt to get ahead of and identify what will be the next big thing, Internet 3.0 (Blockchain Technology).
We’ll dive further into this in my next blog post, “The Internet vs. The Blockchain”, coming soon.
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Thanks for reading.