How the Blockchain Alters the Investment Landscape |
By Domenik Gerapetritis, Co-Founder & CBDO, Extauri, licensed and legally compliant crypto, fiat and securities exchange
META: Traditional investment in securities always had a complicated and exclusive system to transfer value – but the discovery of tokenization can change that.
Imagine having access to any market, asset, security, risk exposure, derivative – any tradable asset you can imagine, and all that in a completely democratized way, also coupled with high-level security. Imagine an agile way to buy and sell those assets immediately, in a liquid marketplace, using a technologically advanced approach that puts you in control of your funds, without delay, at any hour of the day. Borders and geography no longer matter as anyone can gain access to a fully transparent platform for digital assets.
Taking even a cursory look at the cryptocurrency market in November 2018 can terrify anyone – long-standing coins and tokens are being shaken down. But the rapid growth of networks, coins and various types of tokens was a live testing ground for a technology with broader implications for finance and investment. Even as the market prices of crypto assets are crashing, the technology itself is gaining ground, based on the promise of tokenizing real-world value. The crypto market itself based its value on somewhat vague promises. The traditional world of assets, however, maps a much larger universe of risks, value, future expectations and assets.
Tokenizing means bringing that value and expectations into the world of tokens – cryptographically protected digital objects which securely lock in and map value. Applied cryptography, despite the slide of market prices, has gained a foothold with modern web users – so there is a bit more understanding of the ecosystem of wallets, transactions, smart contracts, and a blockchain.
Yet users need a bit more to boost their confidence in security token trading. During a time when exchanges are facing numerous challenges, from regulatory scrutiny to hacking attacks, a secure and transparent, fully legalized marketplace would be paramount to draw in investors, create a hotspot of liquidity, and bring in quality assets.
But the most counter-intuitive aspect is to educate users they don’t need to trust the companies. Trustlessness is one of the features of cryptographic protection – this means that an event, an exchange of value, will not contain a human factor. No one can stop, block, thwart or alter a transaction, meaning any transfer of value is completely safe. Democratizing investment means serving all customers across the globe, without any fears that an entity would run away with their investment.
Tokens, when engineered well, are the perfect vehicle to hold value. A well-built, fully verified and audited smart contract is a powerful tool that can work as an engine to transfer value, is one of the best discoveries of the crypto sphere. In 2018, there are multiple platforms that allow the creation of smart contracts, and developers are learning the pitfalls and risks – hence the drive for more quality, sound programming logic, and the ability to recognize errors. Having the right technology is yet another aspect that will convince potential investors that tokenized assets are superior.
Global security markets are, right now, in an extremely interesting place. Since the crisis in 2008, instead of a stagnation, more and more bubbles appeared, fueled by the liquidity injected by central banks. The markets may be due for a correction rather soon. This may be a factor in adopting tokenized assets, which will open up investment opportunities as stocks, for example, move down from their rather stratospheric current valuations. But any asset can be tokenized – precious metals, currencies, and in fact, held in a much more secure manner. An asset residing on the blockchain cannot be easily diverted, stolen, or confiscated. This combination of real-economy value plus cryptographic security and the advancement of decentralized technologies builds up the appeal of tokenized versus traditional assets.