Hi, this is not really how equity and debt works. Equity holders have every recourse to a failed business. However, they come lower down in the capital structure meaning they will get what is left after debt holders have been paid off. When you own equity, you own all the assets. When a company fails, its mainly because, they face a liquity crunch, so whether you hold debt or equity, you basically hold a failed asset. If the company had no debt, equity holders will get all the salvage value.

Tbh, I read an article a few months ago written by someone who worked at the IMF, who had discussed the potential of blockchain and its application for debt markets. What blockchain can achieve is get rid of custodians/agency banks as they can be replaced by smart contracts.

The real question with debt is how to determine a coupon that accurately reflects the riskiness of that business. Debt does not have unlimited upside like equity because risk associated with a venture cannot go to 0. Even the likes of apple and google have to pay interest that accurately reflects the risk that the markets assign to them.

Coding everything on a smart contract isnt the real problem here. Its determining what numbers to code. And equity is not messy. At present icos are risky because they circumvent the law and are neither equity nor debt. You can have a separate class of equity that mimics debt and pays a set dividend.

Eventually i do think that traditional markets will move to a blockchain because it makes life easy and fast for people to invest and raise capital. But there are other multiple problems with blockchain based companies today that make both equity or debt ico risky.