From January 9th, investors will be able to buy tokenized shares in leading tech companies. The initiative is powered by Estonian-based cryptocurrency exchange DX.Exchange and Nasdaq.
Using the DX.Exchange platform, investors can purchase shares in Apple, Tesla, Facebook and others, represented by an ERC-20 token on the Ethereum blockchain.
Stocks on a blockchain: how does it work?
If you want to buy stock in Facebook, you’d purchase the relevant token on the DX.Exchange. The exchange’s partner MPS MarketPlace Securities will then buy the corresponding Facebook stock, and issue an ERC-20 token to you.
As explained in the accompanying press release:
“Digital stocks are backed 1:1 to real-world stocks traded on conventional stock exchanges. You purchase tokens for leading assets that you choose to invest in, such as Google, Amazon, etc. Therefore, when you are a token holder, you own shares of the company.”
Token holders are also entitled to the same cash dividends as real shareholders.
The trading platform itself will also tap into Nasdaq’s SMART technology, which monitors suspicious trading activity and manipulation.
Why buy tokenized shares?
Firstly, it means you can buy fractions of a share. If you don’t want to buy one whole share of Amazon stock (at $1,500), you could purchase a third of a share via the tokenized platform.
It also means you can buy stocks with bitcoin. Since DX.Exchange is a cryptocurrency exchange, you can simply buy tokenized shares with BTC.
Lastly, you can purchase shares after-hours. Normal stock market trading is restricted to working hours. But with tokenized shares on DX.Exchange, you can buy stocks in the middle of the night.
Speaking to Bloomberg, DX.Exchange CEO Daniel Skowronski said“We saw a huge market opportunity in tokenizing existing securities. We believe that this is the beginning of the traditional market’s merge with blockchain technology. This is going to open a whole new world of trading securities old and new alike.”
Which stocks are available?
The platform will launch with ten leading stocks from the Nasdaq exchange:
More will be added as the platform expands. The tokenized shares will open in Europe on January 9th, and launch in US in mid-late 2019.
There are two main reasons for removing your crypto from exchanges on Proof of Keys day:
To ensure cryptocurrency exchanges actually have the funds they claim. If everyone withdraws their crypto funds on the same day, crypto exchanges will be forced to pay out. If they fail to do so, it’s a huge red flag for exchanges that claim to store your money safely.
To take control of your own crypto. As Andreas Antonopoulos said: not your keys, not your bitcoin. If all your bitcoin is stored on a crypto exchange, you don’t actually own the private keys; the exchange does. That means you’re not in control of your bitcoin or other cryptocurrencies.
Exchanges are huge targets for hackers because they store vast amounts of crypto in one place. Instead, move your crypto to a personal wallet where it is much less vulnerable.
As Block Explorer previously reported, at least 25% of all litecoin in circulation is held by Coinbase. That’s a dangerously large amount of litecoin stored in one place. Not only that, but Coinbase technically owns all that litecoin; not you the depositor.
Proof of Keys is a, therefore, a practical and philosophical movement.
How to move your funds off an exchange
To withdraw funds, you’ll first need a wallet and a corresponding address.
The safest option is a hardware wallet from Ledger, Trezor or KeepKey. These are similar to external hard drives designed specifically for crypto storage. Since they’re offline most of the time, they’re difficult to hack (known as “cold storage”).
There are other wallet options that give you full control of your private keys including software desktop wallets and simple paper wallets.
2018 was a brutal year for the bitcoin price. Shortly after hitting an all-time high, the crypto bubble popped. Over the following twelve months, the bitcoin price slowly bled out to end the year on a low note.
Bitcoin began 2018 at $13,464 and ended the year at $3,742 – a 72% loss in value.
The total cryptocurrency market capitalization fell from $626.6 billion to $125.6 billion – an 80% drop.
How did bitcoin lose 72% in price?
To understand the phenomenal fall in price, we must go back to 2017 – a year of irrational exuberance and hype in the crypto space. Bitcoin became a mainstream talking point and hundreds of new cryptocurrencies emerged. “Initial coin offerings” promised easy returns.
But the mania quickly turned into anguish. As millions flooded to cryptocurrency, Bitcoin came up against severe scaling issues, hindering its adoption as a currency alternative.
And the reality of ICOs was laid bare. Most projects couldn’t possibly deliver on their wild promises. Many were nothing more than scams designed to part investors with their cash.
The subesequent 72% price crash in 2018 was the dose of reality.
Bitcoin price fall triggers layoffs across the industry
As the year progressed, blockchain and cryptocurrency firms began to announce layoffs. Many of these companies had raised money in crypto so the dramatic price falls tore away at their operating funds.
In more high-profile layoffs, Bitmain -the world’s largest bitcoin mining company – is reportedly downsizing with up to 50% of staff members at risk. And cryptocurrency exchange Huobi is streamlining its team, although exact numbers are yet to be revealed.
This is the harsh reality of “crypto-winter.”
$1 billion crypto hacks
The discussion of cryptocurrency security reared its head again after the biggest exchange hack in history took place in January 2018. Coincheck was hacked to the tune of $532.6 million with further hacks at Bitgrail and Bithumb through the year.
The constant hacks weakened trust in the crypto exchange ecosystem and put further selling pressure on the bitcoin price.
Some progress is being made with a landmark move into crypto insurance from the Winklevoss Twins. All funds on their Gemini exchange and custody service are now fully insured.
Even traditional players are stepping into the ring as Fidelity announced a crypto custody service. Expect secure custody services, aka bitcoin banks, to develop at pace in 2019.
Bitcoin hits a regulatory brick wall
Cryptocurrency regulation continued to hinder progress throughout 2018.
The US Securities and Exchange Commission (SEC) took action against numerous ICOs. The SEC chairman concluded that “every ICO I’ve seen is a security,” which means stricter investor rules should be applied.
China maintained its ban on cryptocurrency exchanges, while South Korea authorities raided exchanges on suspicion of money laundering and tax evasion.
Most notably, the SEC rejected or pushed back at least nine bitcoin exchange-traded funds (ETFs). The inevitable launch of a bitcoin ETF is often cited as a major catalyst for the bitcoin price, but the continuous delays weighed on crypto prices throughout 2018.
Any good news for the bitcoin price?
There are plenty of potential price triggers to look forward to in 2019. The much-hyped Bakkt platform is expected in early 2019. Bakkt is a futures trading service settled in real bitcoin and is backed by ICE, the parent company of the New York Stock Exchange.
We will continue to see bitcoin ETF proposals thrown at the SEC. At least one SEC commissioner, Hester Peirce, is supportive of bitcoin and serious discussions are taking place. Expect this to dominate bitcoin conversation for the coming year.
Elsewhere, huge leaps are being made in cryptocurrency technology. The lightning network is rapidly gaining pace in a bid to facilitate micropayments for bitcoin. Blockstream’s satellites are now beaming the blockchain to every landmass on earth, eliminating the need for internet access for bitcoin transactions.
Ethereum and Ripple 2018 price roundup
Ethereum fared worse than bitcoin through 2018, falling 85%. ETH started the year at $880 and ended at $133.
Ripple XRP also fell 85%, starting the year at $2.31 and closing at $0.35.
Gamers can now buy Fortnite merchandise using cryptocurrency. The catch? It’s not bitcoin. The Fortnite store will exclusively accept Monero – a cryptocurrency best known for its privacy features.
Fortnite is the biggest game on the planet with 200 million players. Its official merchandise store, Retail Row, launched on the 19th December and is named after an area on the Fortnite map. Gamers can buy t-shirts, hoodies, and onesies.
To facilitate the monero payments, Fortnite has partnered with GloBee, a cryptocurrency payment provider. GloBee allows settlements in bitcoin, monero or US dollars.
Asked why Fortnite accepts monero but not bitcoin, Monero lead developer Riccardo Spagni suggested it was because of bitcoin’s lack of privacy.
Lack of privacy, but they’re considering LN because it restores *some* privacy to Bitcoin.
Spagni went on to explain that Fortnite wants to offer a private alternative to traditional payment options. “They want to give users an alternative that is privacy preserving. They have no desire to provide an alternative that is the most tamper resistent, because that is not a concern.” [sic]
Fortnite is reportedly considering accepting bitcoin via the lightning network which offers slightly better privacy to bitcoin’s existing infrastructure.
For now, monero is the exclusive cryptocurrency payment option for Fortnite gamers.
To round out the year, we asked our Block Explorer writers to tell us what they’re most excited about for blockchain and crypto in 2019. In this piece, Ana Balashova looks at the startups hoping to take crypto mainstream, as well as the tokenization of assets and next-generation blockchain projects.
This year wasn’t all cuddly and fluffy for crypto. The fearsome bear entered the market and trampled everyone’s dreams of becoming a billionaire in a couple of months. And although crashes aren’t new to crypto, this year things are a bit different: many more people are involved and larger mainstream brands are embracing digital money as payment.
Banks, governments, and regulators are accepting the fact that bitcoin is here to stay. All of that makes me seriously enthusiastic about crypto in 2019. Here’s the list of the things I’ll keep my eye on:
Universal Crypto Solutions
Even though Coinbase has more than 20 million users and Blockchain.com boasts more than 31 million registered wallets, crypto is still far away from mass adoption. And the convenience of using it is still only appreciated by the more techy part of the population.
Real-life example: if my mom would like to purchase bitcoin she always has to ask me to do that. And she is quite capable of using traditional plastic cards or other financial services like money transfer through a mobile app on her phone.
So, there’s still room for improvement in creating those universal solutions, both for consumers and business. One that will work internationally and will allow seamless transactions from crypto to fiat and back. One that boasts a super intuitive interface and straightforward features. That’s why I am quite curious to follow Abra, Blockchain, Purse, Bread, Ethos, EOS Lynx, STK, Metal, PundiX, Request Network, Monetha and all the numerous projects in the field.
Securitization and Legal Clarity
Authorities of various countries are cooking up all sorts of crypto regulatory frameworks. The choice of crypto-friendly countries is growing (Malta? Gibraltar? Finland?) That alone makes the existence and the future perspectives for cryptocurrencies much more compelling.
Even without proper regulations, as much as $22 billion was raised in Initial Coin Offerings in 2018 according to Bloomberg’s numbers.
There are a lot of question marks about those projects. However, the development of the legal side of the story will most likely make a positive impact on the industry. Not to mention the whole new infrastructural solutions that have to be evolved to make it work: properly regulated crypto exchanges, platforms for legal Security Token Offerings, the whole bunch of wallets for securitized assets, etc.
That all adds up to bringing digital currencies from the world of tooth fairies and leprechauns to reality.
Making Blockchain Great Again
In spite of all the awesomeness of distributed ledger technologies, there is always someone to complain. The transactions on Bitcoin blockchain are getting too expensive, or Ethereum got all clogged again because of a popular token sale, Cryptokitties, decentralized exchanges vulnerabilities, and so on.
So all the tools and projects that are supposed to improve what we have so far and to solve all related problems – is something I am personally very interested in.
And, just to clarify, when I mention “problems”, I am talking about things like scalability,interoperability, transaction costs, blockchain developers education, etc. Some of the exciting projects working on these problems are EOS, Aion, Wanchain, Ethereum, POA network, Zilliqa, and others).
Tokenization of Assets
As we know, one of the first applications of blockchain technology was digital money. And the fact that it created so much convenience, transparency, and speed of actual ownership made “tokenization” a viable technology for other assets.
We could see gold -backed tokens (like OneGram, Goldmint, etc.), natural resources backed tokens (e.g. Petro, Venezuela’s controversial cryptocurrency backed by oil), and so much more than that.
With the further development of crypto-related regulations and taxes, more projects tokenizing real estate, pieces of art, rare cars, shares in Silicon Valley startups etc., will pop up.
And the fun has already begun. In October, Forbes announced the first tokenized real estate project in New York, ran by Propellr, the platform for digital assets management and Fluidity, the trading and tokenizing solution.
It’s already possible to purchase a share of ownership of off-campus housing for students at the University of South Carolina. The cost per share is $21,000. Currently, those are being sold by Harbor, the blockchain startup which raised $28 million of venture capital in a fully compliant security token offering earlier this year.
And if you are looking for more affordable ownership options, there’s something interesting offered by Brickblock. The project in development is a 50-unit residential property in the UK. The team is raising £3.35 million by selling tokenized shares valued at £34 per pop.
There are also some moves in the art world. 31.5% ownership of Andy Warhol’s “14 Small Electric Chairs” was recently sold at an auction run by blockchain startup Maecenas this summer. The total value of the sold tokens was $1.7 million with the total estimated worth of the artwork of $5.6 million.
Tokenization of Real Estate on Mars?
I trust that weirder things will find their way to fully compliant blockchain existence. And we might be able to purchase frozen brain cells and other vital organs, square meters and milliseconds in cryogenic cameras, a fraction of space trip tickets (or maybe partial ownership of a cozy industrial loft on Mars), and the list goes on. I can’t wait!
And what are you excited the most?Go ahead and share it in the comment section below.