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:
- AlphaBet (Google)
- Microsoft Corporation
- Intel Corporation
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.
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