Tokenized stocks bridge the trading gap in the blockchain

The dramatic curb on short selling of GameStop stock in January of this year was the moment r / WallStreetBets finally transformed from a humble Reddit forum into a financial force that can no longer be ignored. But amid the memes, trading app dramas, and discussions about the sanctity of the stock market, there was one surprising finding: GameStop’s share price not only rose, but the company listened to its many new retail investors and aggressively accelerated its strategy to move towards it focus on e-commerce. More than a specific failure of the market is the investments of r / WallStreetBets users truly transformed a company that many on Wall Street had predicted would go.

You’d think the Wall Street guys and their congressional fan club would celebrate this as a rare triumph of market evangelism. but the wrong people made money from this event, so the GameStop episode was a dangerous coincidence in their eyes.

The stock market remains in the hands of selfish and corrupt institutions. But just because the traditional market is rigged with rules that change depending on the mood of the elite, it doesn’t mean that ordinary retail investors should completely give up all control over participation and stock trading. Instead, a hybrid model that includes cryptocurrency and puts the tokenized stocks of companies on a blockchain ledger for people to buy, sell and trade can help build a better, more transparent and accessible stock market for all.

Tokenized stocks bridge the trading gap in the blockchain
Tokenized stocks bridge the trading gap in the blockchain

Since I started the r subreddit/ WallStreetBets In 2012 the community grew tremendously and underwent several changes. Until recently, the cryptocurrency debate was banned among r / WallStreetBets users. The latest initiative from R / WallStreetBets aims to create publicly traded products or ETPs that work like traditional ETFs but allow community members to buy indexed cryptocurrency stocks as well as stocks in companies like Tesla or Facebook.

If, as expected in the future, more companies tokenize their shares on the blockchain, they will not only help create a more democratic market, but also benefit from a variety of technological efficiencies and gain access to a powerful army of retail investors.

Tokenization of financial services

As market-friendly as the major institutional players are, the old ways of raising capital still pose a number of challenges and outdated protocols for most companies. The strict rules of the stock exchange help some more than others, as does the willingness of banks and financial institutions to grant loans and to cope with general difficulties for entrepreneurs in convincing private investors to get involved. With stocks tokenized on a blockchain, issuing equity is associated with lower costs and greater flexibility in raising funds. In this way, everyday investors have more say and the value of companies is oriented more towards market forces than towards an elite group of wealthy investors.

Rather than forcing people to guess decisions in dark back rooms, token stocks traded on a blockchain are moved in full sight, with greater transparency for regulators and shareholders alike. Regulators have the ability to instantly monitor capitalization charts and stock activity, as well as view corporate governance votes in the chain. Shareholders, whether they’re studying algorithms or investing their stimulus dollars in meme stocks, can see every activity in the chain related to selling stocks as well as other stockholders’ voices regarding company decisions. This system is much fairer for everyone involved than the current status quo.

Our outdated system restricts shares by law, which means that a Portuguese citizen is barred from investing in companies that may even operate in their own country. In my opinion, anyone who sold their Wii for 3 euros or 550 yen should have the right to throw money at GameStop. But a blockchain-based system makes token equity universal and accessible 24 hours a day, 365 days a year. Not only does this change provide better access, it also eliminates after-hours trading and the dark pool that allows institutional investors to trade without revealing themselves and without publicly showing their intentions while looking for a buyer or seller . The r / WallStreetBets ETP initiative overcomes these built-in prejudices and removes the advantage that large institutions abuse to conduct secret operations that promote inequality.

The TLDR summary (not read for too long), which borrows an online term, says that blockchain enables the creation of community governance that is fundamentally incompatible with traditional finance. Democratic features such as community surveys allow each individual participant to help shape investment allocations and decisions, and the results are clear. Numerous scientific studies have compared the accuracy of the financial markets at professional retailers and decisions made by collective intelligence, and have shown time and again that a group of people outside the company can also outperform the major indices.

To take a slang term from the r / WallStreetBets subreddit about the power of investing as a community, Research confirms that “monkeys together” are really strong and somehow make better decisions as a collective than professionals. If Wall Street calls for market manipulation, when a group of ordinary people come together to pursue their economic interests, it may be time for a new market.

The views, thoughts, and opinions expressed herein belong solely to the author and do not necessarily reflect the views and opinions of Cointelegraph.

Jaime Rogozinski is one of the founders of WallStreetBets, the internet movement that started the meme share phenomenon that challenged Wall Street. It was published in the Wall Street Journal, CNBC and other media outlets. It is currently working with the founding members of the WallStreetBets movement to create a decentralized autonomous organization where tokenized stocks and crypto-assets can be accessed by anyone in the form of ETPs, which, like index funds but digitized, are available to everyone and much more, much more difficult to manipulate.

Similar Posts