Tokenized Stocks: Coming To An Exchange Near You
Professional border crosser. Preoccupied with crypto, design, travel and anything that turns on.
A long, long time ago (depending on your historical outlook), in a stock market far, far away (depending on where you’re currently reading this), risk-seeking Dutchmen congregated in coffee shops (something like that) to trade little pieces of paper, which, in theory, allowed them to reap the profits of voyages to unknown lands where new commodities would be discovered (like sugar and stuff like that). These little pieces of paper would come to be known as stocks (aka stonks).
One of the most hype-worthy investments of the time was a little startup called the Dutch East India Company, arguably the world’s first corporation. However, our risk-taking Dutchmen (who really just got to stay home while others embarked upon dangerous voyages across the ocean) were limited by several factors:
- They could only trade their little pieces of paper with individuals within close proximity.
- Because they were limited to trade with people nearby, there weren’t a whole lot of people to buy their pieces of paper (stocks). If you’re a Finance dork you’d call this “liquidity.”
- They were limited to the opportunities around them. If only they could easily invest in British or French voyages!
Over the next couple hundred years, investors’ voracious appetite for ingenuity would solve the problems of our brave Dutchmen. Global liquidity convened in financial hubs, like London and New York. The New York Stock Exchange became the preeminent home for ventures looking to raise money from the public.
Brokers were born to facilitate transactions between buyers and sellers (and stare at Bloomies all day). Most notably, the evolution of finance would eventually empower legions of pajama-laden retail investors to trade stocks or cryptocurrencies, right from their phones, until around 4 p.m Eastern when the market closes and they finally take a shower and bathe in their profits like Scrooge McDuck.
But… There are still problems abound!
- WTF do I do if I’m jacked up on Bulletproof cold brew and nootropics and still want to trade past 4 p.m. ET?
- What if I don’t live in the U.S. and want to HODL or flip some U.S. equities?
- What if I mixed too much whiskey into my Irish Coffee and realized I’m not in the right state of mind to throw down $3K on 1 share of Amazon but want just a little taste?
- And most importantly, what if I want to buy an index that lets me play the crypto and equities game in the same play?
The answer to these problems is coming to an exchange near you. Welcome to tokenized Stocks, the latest innovation in a long chain of innovations that will democratize access to finance and change how we trade stocks forever.
Tokenized stocks just launched onto the scene like a Falcon 9 rocket and people are going to be excited in the same way our brave-but-not-so-brave Dutch risk takers were chomping at the bit to buy their pieces of flimsy paper (stocks). ATM, the 2 biggest exchanges to enter the space are Bittrex Global and FTX.
So what exactly are tokenized stocks? Tokenized stocks are assets that represent shares in a company just like a stock in your e-trade account or a flimsy piece of paper representing Apple stock that your Grandfather gifted you but made out of sweet, sweet bits.
So what makes them special besides the fact that they sound cool AF? A couple of things:
- 24/7 Trading: Just like crypto, tokenized stocks don’t sleep and exchanges that sell these assets don’t sleep either so you can buy and trade them 24 hours a day, a.k.a.all the damn time! This isn’t the New York Stock Exchange that’s gonna snooze on you at 4pm every day like a narcoleptic cat. Tokenized stocks are ready for action whenever you want.
- Global Access To U.S. Equities: Gone are the days when only U.S. citizens and high-end financial institutions are the only ones allowed to trade stocks on the New York Stock Exchange. Tokenized stocks democratize access to the stock market and allow retail investors all over the world to jump into TSLA stock no matter where they live. By tokenizing the stock, they’re no longer only accessible to those with the right postal code.
- Fractionalized Shares: So you mixed too much whisky into the Irish coffee and you’re scared to buy a whole share of Amazon stock? Or you really just want 2.7 shares of Amazon cause those are your lucky numbers and you’re secretly superstitious. Lucky for you, tokenized stocks allow you to buy fractionalized shares, or fractions of a stock. Long story short, you don’t have to buy the whole damn thing. This is huge because sometimes committing to even 1 share of Amazon at $3K a share may feel a bit overzealous. With tokenized stock you can invest the exact amount of cash you’re comfortable with vs. buying entire shares.
- Bundles and futures: Soon you’re going to start seeing bundles of stocks like FAANG as these synthetic stocks will be easy to group together. The SPDR ETF that bundles the S&P 500 is already available on both Bittex Global and FTX. These tokens will work as a balanced crypto/equities index giving investors exposure to crypto and stocks in one investment.
In addition, FTX already offers Degens the ability to leverage trade up to 100x.
Bitcoin brought us the crypto revolution and now tokenized stocks will make traditional finance play by some of the same rules that made crypto a global phenomenon.
Our brave-but-not-so-brave Dutchmen would be blown away by the financial interconnectedness of our time (and by the Bulletproof coffee and nootropics as well). Tokenized stocks are the latest growth of the seed they planted long ago. Get strapped in for a new era of globalized finance that empowers retail investors the world over.
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