The Traditional Stock Market is Redundant
I was reviewing my Share Portfolio yesterday as part of my regular process of rebalancing of my assets and I came to a realisation. I normally like to have a diversified portfolio to hedge against risk and the possibility that any one single investment could go bad. That is the reason why I haven’t gone ALL-IN on Crypto even though I think it is world changing technology. But I kept coming back to a single question that I was asking myself and I just couldn’t get past it :-
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Crypto Technology is a game changer, not just for our Currencies but also for the way we manage and transfer our Assets. For a while now I have believed that Ethereum and its ERC20 Token protocol is being used in a way that very much resembles a Stock Market. People are using ERC20 tokens to raise capital, assign a “share” to investors and track the ownership of those “shares” just like a Stock Exchange does. Some of these Tokens are even paying dividends, just like shares. Crypto Technology is already doing this job of managing a Share Registry in a decentralised manner much cheaper, faster and more efficient than the Traditional Stock Markets do.
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There are a lot of industries that are going to face major disruption from Crypto Technology and the Traditional Centralised Stock Exchanges are right in the cross-hairs. Already the Australian Stock Exchange has announced that it intends to adopt Crypto Technology to record shareholdings and manage the clearing and settlement of equity transactions, but in this day and age of Globalised Economies do we really even need National Stock Exchanges anymore? Is Venture Capital really enabled or inhibited by National borders? Should it be?
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It seems to me that Ethereum and its ERC20 tokens are already proving it can do the job better and just around the corner we have EOS – potentially the Ethereum killer which is only weeks away from launch. EOS is potentially about to totally go “Next Level” on the underlying technology and give us ultra-high performance Smart Contracts that will compete with Ethereum. There is massive innovation happening in this Crypto space and I genuinely don’t see the old Traditional Institutions keeping pace. They are on a hiding to nothing and the writing is on the wall for them. They are slow, expensive, bureaucratic and they create significant barriers to entry. In my opinion all this makes the Traditional Stock Market totally redundant. There is now a MUCH better way and it’s getting better!
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So for me the only thing I really need to do is wait for those companies listed on the ASX to put up an ICO and list themselves with an ERC20 Token, or the EOS equivalent. We are already seeing some of the gigantic Tech companies like Facebook and Amazon starting to look at launching their own coins and these are just the first couple of drops in the ocean. It’s going to become a flood over coming years and yes, it’s going to be chaotic, but those with the foresight and vision to read the writing on the wall….they won’t be left behind.
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Amazing publication... thanks for sharing this post
Just like you name it I believe in a certain chaos as well whenever all traditional companies launch their own coins trying to get a share of the cake... Somehow I hope though that people will rather move to decentralized options rather than centralized and company owned coins, which I e.g. believe the one of facebook will be.
Yes, that's a good point and I should have clarified. The Facebook and Amazon coins are not intended to represent equity, but it indicates they can see which way the technology is headed and they at least realise they need to be part of it.
At some point I would expect them to de-list on the traditional stock exchanges and migrate their share registry to a crypto token and platform. Then again it's possible they will just go the way of the other dinosaurs and never properly survive the transition :)
I would suggest that nearly ALL of the NEW tech startups are raising money now via ICO rather than IPO. This is just the thin edge of the wedge and an indicator of things to come.
True, the only issue I see with ICO's these days though is that a huge portion of it is basically almost to be considered as fraudulent activity... So many projects are popping up without anything to present nor any intent to deliver. For that to change the people will either have to wake up and stop to blindly throw their money at anything or alternatively it has to be regulated in some way, which is already happening a little.
There is a lot of scam, fraud and outright theft going on in Crypto right now but that is because it is such a new and immature market that most investors do not yet understand. It's still the Wild West but over time that will change.
Some would argue for regulation but I think it just needs investors to wise up and for ICOs to get independant respected auditors and ratings agencies to go through their operations, like a voluntary accreditation process that investors can come to trust.
EOS also apparrently has made strives on the Governance side of things too, so dispute resolution will exist and scamming on that platform may be a lot harder. These are baby steps, but steps none-the-less and the direction is clear.
Regulation doesn't have to come from the official side only of course as I see any action towards a more open and transparent ICO market as a step towards a brighter future for us all. Might it be Governance on EOS or initiatives rating ICO's, they all contribute to regulate the market in some way just not through direct laws.
I hope Steem can hit $10 this year.
You have some nice points but also some reasoning I always see in crypto discussions. We want it to happen because it would be beneficial for all of us since we are the early adopters.
I'm in crypto for some years now and apart from the valuation I don't see any exponential growth. It all remains in the crypto area or some kind of gimmick.
Where are all the great projects that could be world changing like claimed alot in crypto land.
For me it's still a great invention looking for a problem that needs to be solved. But still a great invention :)
Look harder.
What you do when you want to buy shares in a company listed on a foreign stock exchange? What if you only want a small share? What if you can't afford the brokerage fee?
There's 3 problems and I wasn't even trying :)
I can buy any share I want today :) What is the use of only a small share ? There is always a fee :)
But I see where you are going. It is true but for me it's not important enough to move the needle...
You are 100% right. DEXs make traditional exchanges overpriced, inefficient, and unnecessary.
But your post also inspired me to think about the debt market, where the same thing can be done.
https://steemit.com/cryptocurrency/@nealmcspadden/icos-to-raise-debt-not-equity-an-alternate-funding-strategy
Thanks, that's a good read :)
Even the current stock market investors are considering to jump from traditional to the future way of investing, and that is Crypto. Indeed, it will never be long before we see fb coins and amazon coins being traded in the crypto world.
Make sure you've EOS in your portfolio!
You better believe it ;)
The problem with ERC-20 tokens completely replacing stocks is that not every project need a token. What you are seeing right now is people forcing tokens where they are not necessary simply because they want to profit from the ICO craze.
Also, when you buy an ERC-20 you are investing only on the part of the company that is using the ERC-20 token. In a stock, you invest in all the projects of the company.
Stock is equity in a company, one that potentially has positive cashflow. There are rights for holders of stocks and bonds. Stock ownership is actually the original proof of stake, you can make big changes if you're the majority shareholder, lol.
Yes, many ICOs and coins are scams, there are way too many vaporware projects led by scammers.
The biggest hurdle for all existing coins is maintaining value and keeping the interest of the public and other companies even when the technology has matured and other corporations can just copy-paste the parts of the chains they want to use internally to save money.
Thanks.
I am not saying all ERC20 tokens are shares. Fair from it. But all shares could be ERC20 tokens if companies migrated their share registries.
True, most any equities type thing could be tokenized, but I think it would take a while before it's user-friendly enough to even be approached as such.
Thanks for that very simple and informative way of explaining crypto technology and it's future. Loved the simplicity. Look forward to hearing more
Thanks. I try to keep my posts and language simple so that they are accessible for the mainstream reader. It doesn't always work though :)
Yes indeed.. but the words you used real simple to understand like drinking cup of tea.😋 rather then others use terms like
That was really confusing right?
thank you for keeping it simple. @buggedout
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