One of the potential applications of blockchain technology is for the settling of stock market shares in real time with tokenised proof of ownership. It might be quite surprising to many that the settlement period (the time that it takes for shares to change hands formally) is on the order of 2-3 days! This means that at any one time, it can be difficult to tell who actually owns what... which allows all sorts of shenanigans to be played out, with it all coming undone at a later date.
Some of the downsides of this also played out with launch of Coinbase's offering (COIN) on the traditional stock exchanges. I was listening to one analyst interview where they just casually mentioned that they actually don't know for sure how many units of stock have been issued and that they have to rely on the initial estimate from Coinbase! Apparently, this is not really that uncommon... but it is a surprising and somewhat disturbing revelation from an outsider. It is pretty much similar to the idea that we have no idea how much fiat is exactly in the economy... just an estimate! A good one (hopefully...), but still an estimate.
Binance has just started offering stock backed tokens in what is a stepping stone towards the eventual tokenisation of stock ownership. They just launched the Stock Backed tokens about a week ago with Tesla shares, but my interest only kicked in when they launched the Coinbase share backed tokens. As an overseas (non-US) retail invester it is a pain in the arse to get exposure to these companies... and Robinhood doesn't give you direct exposure (they give you an IOU which is hidden among a jungle of interlocked derivatives).
Binance states that these tokens are 1:1 backed by a custodian holding the shares... although, this part is still quite opaque due to the existing stock ownership system. So, there is a degree of trust that needs to be maintained there... which is not ideal, but it is what it is.
Holding these stock tokens gives you the ability to redeem for crypto of the same worth or the actual stock certificates (albeit with costs and fees). Governance rights are NOT conferred whilst economic details like stock splits and dividends are.
Personally, I have more interest in the COIN stock in comparison to the TSLA stock. I find Elon Musk to be a mix of vision and irresponsibility. I don't like the way that he pootentially is leading retail investers along whilst not seeing any potential carnage... but I do like the idea of Tesla and Space-X. So, much in the way of mixed thoughts about him... Brian Armstrong is someone who I appear to have more affinity with, despite not knowing that much about him. Plus, despite what many people say about Coinbase, it is still the first point of contact for most people and also for large institutional money. It is an important part of our crypto landscape!
So, this is a nice change to kick the tyres and test out the Binance stock backed tokens. You can by fractional shares as far as I understand (I didn't try), although I do wonder how that works with redemption for actual shares (probably not possible). I wonder what other companies they are going to list in the future. I guess it will be mostly technology and crypto-aligned stocks... but I think that would be a pity, it would be nice to have exposure to a wide variety of sectors!
Ahhhh... I forgot that traditional markets close over the weekend and have actual trading hours! You can't buy or sell when the stock market is closed! Oh well, lucky I had already bought them during the week!
Handy Crypto Tools
Ledger Nano S/X: Keep your crypto safe and offline with the leading hardware wallet provider. Not your keys, not your crypto!
Binance: My first choice of centralised exchange, featuring a wide variety of crypto and savings products.
Kucoin: My second choice in exchanges, many tokens listed here that you can't get on Binance!
Coinbase: If you need a regulated and safe environment to trade, this is the first exchange for most newcomers!
Crypto.com: Mixed feelings, but they have the BEST looking VISA debit card in existence! Seriously, it is beautiful!
CoinList: Access to early investor and crowdsale of vetted and reserached projects.
Cointracking: Automated or manual tracking of crypto for accounting and taxation reports.