How Tokenization Will Radically Change Investing
Money For the Rest of Us
J. David Stein
4.5 • 1.4K Ratings
🗓️ 31 October 2018
⏱️ 34 minutes
🧾️ Download transcript
Summary
#228 How distributed ledger technology and tokenized assets will increase liquidity, transparency and fractionalization, allowing investors to purchase very small, liquid positions in real estate, private companies, art and other assets. Thanks to LinkedIn for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:12] Stocks ownership used to be tied to paper certificates, but there’s a problem with electronic records as well
- [10:00] Proxy voting in trading can lead to complicated issues that are almost impossible to solve with certainty
- [17:40] Tokenization could be a solution to today’s convoluted trading system
- [22:38] A new type of distributed ledger would allow for asset-backed tokens
- [27:03] There are some challenges to tokenization that need to be addressed
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Transcript
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| 0:00.0 | Welcome to Money for the rest of us. This is a personal finance show on money, how it works, how to invest it and how to live without worrying about it. |
| 0:10.5 | I'm your host David Stein today as episode 228. It's titled |
| 0:14.8 | How Tokenization Will Radically Change Investing. |
| 0:20.6 | Tokenization this was a topic that came up on the Money for the Restless Plus |
| 0:26.0 | member forum. Jane asked about it and I frankly didn't. I wasn't sure what it was. |
| 0:32.2 | And then later I got an frankly didn't, I wasn't sure what it was. |
| 0:33.2 | And then later I got an email from another plus member |
| 0:37.1 | Eric and Mathias who sent me some helpful links |
| 0:42.1 | on the topic. Before we discuss what tokenization is, let's look at the problem |
| 0:49.7 | that tokenization promises to solve. Back in the day, and we'll call the day back up until |
| 0:56.7 | the 1960s, when you bought a stock, a stock is ownership in a company, if you bought a publicly traded stock there was a paper |
| 1:04.8 | stock certificate that went with it and in the US on Wall, the reason why so much trading and |
| 1:15.0 | brokers were headquartered around Wall Street in Lower Manhattan |
| 1:20.0 | is because these stock certificates needed to be transferred from one firm to the other as stocks were traded. |
| 1:31.0 | So in order to finally settle the stock, the paper certificate needed to be either |
| 1:38.1 | sent out to the owner or kept at the brokerage firm where the particular owner or account holder had traded the stock. |
| 1:48.9 | It got to be a real problem. |
| 1:51.9 | So by the 1970s I mean there was such a backlog of all this paper moving |
| 1:56.7 | back and forth. There were times they would just do trading holidays just so they could |
| 2:02.2 | catch up on the paperwork. |
| 2:05.0 | Beginning in the 1970s then, the industry adopted what was known as |
| 2:11.0 | immobilization, immobilizing these physical stock certificates. |
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