Blockchain and the Stock Markets are Beginning to Merge

Published on: August 7, 2021
Author: Amy Liu

Tesla, Apple Stocks Have Started Trading on the Blockchain

What if you could buy and sell stocks without needing to go through a brokerage? What if transactions were completed in minutes rather than days, and what if investors no longer had to pay hefty commission rates?

For years the question of whether the stock market could be moved onto blockchain – the underlying technology behind cryptocurrencies – has been circling. Some exchanges like NASDAQ and the Japan Exchange Group have even begun experimenting with blockchain trading.

However, they are not there yet. And in the rapidly developing world of decentralized finance, DeFi innovators aren’t waiting to see what DeFi stock markets will look like; they are working now to make it happen.

Step in tokenized stocks: synthetic equities that track some of the world’s biggest companies but traded on blockchain exchanges.

Apple (APPL:NASDAQ), Amazon (NASDAQ:AMZN), and Tesla (NASDAQ:TSLA) are just a few of the big-name stocks that have had synthetic versions created by projects Mirror Protocol and Synthetix. The tokenized stocks are designed to track the real-time prices of the securities they represent without the need to buy or sell any of the actual stock.

Right now, volumes of these synthetic stocks are a fraction of the real stocks they represent, but that’s not stopping crypto enthusiasts from sounding the bell on what they believe is the next big thing.

WSB Says That Trading Stocks Via Blockchain Will Be ‘Next Big Wave’

In a recent interview with Yahoo Finance Live, Wall Street Bets founder Jaime Rogozinski, who is no longer associated with the forum, shared why he believes that trading stocks via blockchain will be the next big thing to hit the stock market.

“I think the next wave will be when we start seeing stocks being traded on the blockchain.” He said, “If we’re talking about reducing the barriers of entry into the market, crypto is already getting into tokenized stocks, being able to purchase, and then really the floodgates are completely open.”

Pivoting away from traditional exchanges to a blockchain stock market would completely transform our existing securities trading systems – and that’s exactly what blockchain technology and DeFi aim to do.

While the idea has yet to materialize fully, several companies are developing DeFi protocols that would enable individuals to buy and sell stocks from each other.

So How Exactly Do These Stock Market Linked Blockchain Assets Work? Well, It’s Complicated

The raison d’etre, the entire purpose of decentralized finance, is to eliminate the need for third-party intermediaries like brokers and exchanges, and with them, the rules and barriers of traditional financial systems.

How synthetic stocks work is complicated. These tokenized assets are designed to mirror the price of the real stocks they represent without having to trade, or even own, the actual security. Oracles feed real-time pricing information to the blockchain trading platform, and synthetic stock traders receive incentives to keep prices in line with the real stock. Users can arbitrage price divergences by minting new tokens when prices fall too low or burning existing tokens when prices climb too high.

Blockchain exchanges are open to anyone and enable 24-hour trading without regulatory restrictions or capital controls.

Right now, the actual trading volume of these tokenized stocks is low, and the price mechanism is not perfect. Mirrored Apple (mAAPL) currently has a market cap of $25.76 million, compared to Apple’s NASDAQ current valuation of $2.4 trillion.

Prices between real stocks and their tokens can vary, sometimes considerably. At the time of writing, APPL was trading at $146.14, and mAAPL was $148.21. TSLA was priced at $699.10 on the NASDAQ, and mTSLA was trading at $725.88. However, as trading volumes increase, these large price discrepancies will become far less common.

The Market for Crypto Assets Is Booming

Cryptocurrency was envisioned as an alternative to fiat money, but the underlying technology has evolved into much more. Blockchain technology will fundamentally change many key industries, starting with traditional banking and financial systems.

Blockchain stock markets could experience explosive growth over the next ten years, driven by technological improvement and shifting demographics.

Gen Z and Millennials have grown up in the digital age; they are more accustomed to technology and better able to grasp the value of virtual goods than previous generations. And that includes crypto assets.

According to a recent CNBC survey of Millennials with over 1 million in investable assets, close to 50% of them reported holding at least 25% of their wealth in crypto assets, with that number increasing for younger Millennials. By comparison, 83% of older generations responded that they hold no crypto assets.

Over the next decade, Millennials stand to inherit $68 trillion from Baby Boomers. And when they do, data suggests that they may be looking outside of traditional markets to grow their wealth.

To capture some of that growth, investors should pay attention to the company powering Canada’s blockchain revolution: Blockchain Foundry.

About Blockchain Foundry

Blockchain Foundry Inc. (CSE: BCFN) develops and commercializes blockchain-based business solutions and provides consulting services to corporate clients seeking to leverage blockchain technology in their businesses.

The Company uses proprietary technology and open-source blockchain technology to build solutions for clients across industries, including digital identity, financial services and token wallet infrastructure. Many of Blockchain Foundry’s blockchain innovations are proprietary IP, and they are exploring ways to productize these innovations in the future.

Blockchain Foundry Is Building Blockchain Applications for Real-World Uses Every Day

Blockchain Foundry helps businesses stay ahead of the curve in a rapidly changing environment by fostering the innovation of real-world blockchains solutions.

On July 6, the Company signed a blockchain development agreement for Evolve Media’s new venture Gifty.

This unique platform will allow crypto holders to gift cryptocurrency and NFTs to anyone, even recipients without crypto wallets, solving a major obstacle to crypto gifting. Rather than going through the arduous task of creating a crypto wallet, gift recipients will be able to easily access their crypto via the Gifty dashboard.

Blockchain Foundry Inc. has also entered into a development agreement with the House of Kibaa.

The digital studio specializes in the creation of exclusive NFTs for Extended Reality (AR/VR/MR), allowing users to conceptualize and design unique products within the blockchain. Now, together with Blockchain Foundry, the Company will develop a first-of-its-kind extended reality NFT marketplace built on Blockchain Foundry’s cutting-edge Syscoin LUX platform.

Disclaimer: The company described in this article is a customer of NAI Interactive Ltd. This material is for informational purposes only and is not intended as a recommendation or offer or solicitation for the purchase or sale of any securities or financial instruments, or for transactions involving any financial instrument or trading strategy.

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