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The cryptocurrency market had a rather long year in 2018, from 85% from its January peak to the continuing repression of regulations in China, to another sharp decline last November. CoinWatch has traced everything, the bad and the ugly, like Bitcoin (BTC), Undulation (XRP), and Ethereum (ETH) led the descent from the heights. From all appearances, the new year will not be kind to the encrypted.
Appearances can be deceptive. There may be new hope for the incoming crypt, sooner than you think. A new product, based on Wall Street stock markets, has just hit the blockchain trading networks, and it's worth taking a closer look.
Enter security tokens
A cryptographic trading platform based in Estonia, DX.Exchange, launched a new blockchain product: security token on January 7, supported by a 1: 1 ratio in shares of several major US-based companies. The concept owes something to the stablecoins, the cryptocurrency offers based on blockchain anchored to traditional currencies, usually the US dollar.
DX offers many advantages to trading stocks such as digital blockchain tokens, starting with the security of the blockchain system itself. Furthermore, like cryptocurrencies, security tokens are tradable 24 hours a day, seven days a week, even when markets are closed. While a security token equates to a shareholding, traders are able to manage fractions of tokens – again, as with cyrptocurrencies. Finally, the offer of securities as a security token will make US stock markets more accessible to foreign traders.
Among the companies whose DX stock offers as security tokens are Google, Amazon, Apple, Facebook, Netflix and Tesla. Each token corresponds to a share of the company, so the value of the token is determined by the stock price of the stock backing. Ownership of a security token is equivalent to ownership of a share and, like the security, entitles the trader to pay the company's regular dividends.
A new way to exchange the stock market
Moving traditional securities into a blockchain-based trading system could open a new paradigm for investors, especially daily traders or small market players. The option to exchange fractional tokens will lead to expensive prices, like Amazon or Google, within the reach of those smaller players. The stock support of the tokens makes them a slippery investment, less prone to the notoriously high volatility of "traditional" cryptocurrencies like Bitcoin.
Describing the move of his company in this niche, and the advantages are the offers, the DX COO, Amedeo Moscato, said: "The crypto community has been talking about security token for over a year without much progress, so we think that Impact will be huge, hurrying the shares of some of the largest publicly traded companies like Google, Amazon, Facebook and more, we are opening up an unexpressed market of millions of old and new merchants worldwide who eliminate the intermediary " .
Another advantage of security tokens compared to cryptocurrencies lies in the field of regulation. Since its inception, the cryptocurrency trading blockchain has developed a "Wild West" reputation, derived from its volatility, its independence from traditional financial markets and its simultaneous transparency for traders and the invisibility of regulators. Blockchain registries provided both security for operations is a record of verifiable transactions, while cryptographic tokens – Bitcoin and its type – were so new that traditional regulators like SEC did not know what to do with them.
Both an Equity to a Crypto token
Security tokens short-circuit that undisciplined reputation, keeping the best parts of the blockchain and putting the "currency" under the regulator's eye. DX has already said that its digital securities are classified as derivatives, based on the underlying shares, while the US regulatory authorities suggest that the new tokens are considered as securities, and therefore will fall under the SEC heading.
A regulated cryptographic token, supported by a reliable asset and supervised by known and predictable regulatory authorities, would quickly bring order to the blockchain trading universe. Looking ahead, DX.Exchange CEO Daniel Skowronski said, "We believe this is the beginning of the merger of the traditional market with blockchain technology, which will open a new world of securities trading, both old and new. in the same way. "
Author: Michael Marcus
Revelation: I / we have no positions in any of the above mentioned titles, and we do not plan to start any positions within the next 72 hours. I wrote this article alone, and expresses my opinions. I'm not getting any compensation for this (other than Seeking Alpha). I have no business relationship with any company whose actions are mentioned in this article.
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