Imagine a world where you can buy stocks, bonds, derivatives, cryptocurrencies, or even art on one exchange, 24 hours a day, seven days a week, from anywhere in the world.
On this exchange, transactions take place directly between two investors, rather than through a complex network of brokers, clearing houses and other intermediaries and controllers. They calm down or close almost instantly, instead of two days. The system is cheaper, more transparent and ostensibly more open. It is also potentially more volatile and risky for investors; profits can turn into losses in the blink of an eye at any time of the day or night.
Entrepreneurs have dreamed for years of leveraging the blockchain technology, concepts and software behind Bitcoin to enable digital trading of virtually any asset. This idea seems less far-fetched today than ever.
When the video game trade GameStop Corp. exploded, it demonstrated how fragile today’s markets can be. He also showed that a new generation of exchange traders operate much like crypto traders: flash mobs of retail traders gathering on social media and choosing an asset to buy in bulk have been a hallmark of cryptocurrency trading for many years.
Current capital markets are not built for this kind of trading, but a number of pilot programs and other experiments are exploring how to create digitized markets that can keep pace with the times. “We are witnessing the beginning of a tectonic shift,” says Jeffrey Schumacher, founder of New Asset Exchange, a Manhattan Beach, California-based startup that aims to help companies create and sell digital securities.