In the immortal words of Arnold Schwarzenegger: “I’m back!”
Aside from nearly killing myself go-karting over Christmas, I’ve had a pretty relaxed “holiday season”, as our American friends would say.
The same can’t be said for the crypto markets – which I’ll get to in a second. First, I just wanted to thank everyone who wrote in over Christmas.
As you’ll know, before Christmas I looked back over every piece I wrote last year and picked my ten favourites to send you while I was away.
There was one piece in particular that really struck a chord: Our government’s cannabis corruption laid bare.
Just like the first time it went out, I had many of you writing in to say how disturbing they found the corruption I partially uncovered.
I say partially because I didn’t really discover anything myself. I simply put the story together from other, far more reputable sources, such as The Times and The Independent.
And I should stress that since I first wrote the piece, the government has changed its policy on medical cannabis. But that doesn’t mean we should just forget how and why it was forced to do so.
As I say, it’s likely no politician will be held to account for their corruption, but I think it should at least be publicised. At least people should know the truth.
So thank you to everyone who wrote in to me over Christmas. At least political policy is changing on this subject, albeit only because of the weight of public pressure.
As a writer, I can’t really do anything directly to combat this kind of political corruption, but I can bring attention to it.
Now, let’s get back to crypto, because last week saw a development that I believe will eventually cement its future as the foundation of our financial system.
It’s happening – Apple, Facebook and Tesla shares are being tokenised
I’ve written many times that the stockmarket will eventually be tokenised. I even wrote a whole Crypto Wire edition on it in July. Well, now it’s finally happening.
And not just happening in the way that Swiss Stock Exchange SIX is going to start running a trial stock exchange on blockchain. No, in the actual tokenisation of company stocks way. Big companies. Companies like Apple, Tesla and Facebook.
A digital exchange opening next week will enable investors to trade in companies including Apple Inc., Facebook Inc. and Tesla Inc. outside of the U.S. even when the stock markets are closed.
DX.Exchange, which has offices in Estonia and Israel, will offer digital tokens based on share of 10 Nasdaq-listed companies with plans to expand to the New York Stock Exchange as well as in Tokyo and Hong Kong. Each digital security is backed by one regular share and holders will be entitled to the same cash dividends, even though the companies themselves aren’t involved.
In this model, DX.Exchange will still act as an intermediary, sort of like how a traditional broker does now. Only it will be open all the time and let people trade in fractions of a share.
Eventually I expect to see companies being tokenised directly and completely cutting out the brokers and middlemen.
So this certainly isn’t the end destination. But it’s definitely a significant step along the journey.
And what’s more, it’s using the Ethereum blockchain, which is great news for Ethereum holders. This is the kind of “adoption” that the crypto world has been crying out for.
From the same article:
Digital stocks could hold advantages over traditional shares because they can be traded even when exchanges are closed, and traders can choose to buy fractions of a share. They could also give foreign investors the ability to buy and sell U.S. shares they might otherwise struggle to access.
Even though U.S. regulators oversee trading of DX’s initial roster of stocks, Chief Executive Officer Daniel Skowronski said he doesn’t need permission from the Americans to offer this service because DX doesn’t operate there. The company says it’s licensed by the Estonian Financial Intelligence Unit with full authorization to operate in the European Union.
“We saw a huge market opportunity in tokenizing existing securities,” the CEO said by email. “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.”
If you’ve ever tried to buy overseas shares, even big ones like Amazon, you’ll know it can be a real headache.
You have to fill out many complicated forms and it certainly is not something you can do without help.
One of my friends is a computer scientist. He understands how complicated systems work – it’s his job to create them. But even he gave up on trying to buy US-based Amazon shares a couple of years ago.
He was simply overwhelmed by all the paperwork he had to fill out and regulations he had to learn. So, in the end, he decided not to bother.
As the Bloomberg article says, tokenising stocks could “give foreign investors the ability to buy and sell US shares they might otherwise struggle to access.”
This really could be the start of something big. This is the way the world is going. I firmly believe crypto will eat the stockmarket. And I am far from alone.
It’s a simply a matter of when.
If you want to find out more about how this will happen, you can read issue four of Crypto Wire. If you’re not yet a subscriber, you can join here.
And staying on the crypto theme, just before I go today, I think I should mention the big price swings we saw over Christmas.
While many of my friends and colleagues swore off crypto over Christmas, I was sad enough to keep up with it all.
If you were too, you’ll have noticed some pretty sizeable price swings over the last few weeks. One day the market was up 20%, the next it was down 15%.
However, the general pattern has been up. There has been hushed talk of a recovery – a real recovery.
If prices keep steadily rising for a few more weeks that talk will spread. We may actually see bull rerun.
Of course, this is crypto, so it could just as easily drop lower and lower.
What’s even more interesting is that crypto’s highest gaining days were against the backdrop of the stockmarket’s worst.
The jury is out on what will happen to crypto prices in a stockmarket crash.
Many think that with crypto being the quintessential risky asset, its prices will fall through the floor.
However, crypto was created to be an antidote to the traditional financial system. Remember the words contained in bitcoin’s first transaction: “Chancellor on brink of second bailout for banks.”
Bitcoin was birthed from the failure of traditional financial systems. Perhaps it will flourish in a recession. Or perhaps not. Nobody really knows. And I wouldn’t trust anyone who claims they do.
Still, 2019 is already shaping up to be an interesting year for crypto prices, and developments.
Until next time,
Editor, Exponential Investor
PS Thursday was the ten-year anniversary of bitcoin’s genesis block. That’s the one that contained The Times’ headline: “Chancellor on brink of second bailout for banks”. So I guess it was only fitting that a crypto company decide to honour it on Thursday’s The Times front page. Take a look at the bottom of the photo below. It’s also pretty apt that there is another debt-related headline on this Times edition, too.
If you want to understand more about investing in bitcoin and cryptocurrencies Sam Volkering can help. He has book called Crypto Revolution which explains how to make money buying and holding crypto currencies… And you can also get your hands on two free reports a “Beginner’s guide to investing crypto” and “Nine Crypto-coins to avoid at all costs”. Click here to find out more.