Security tokens, the future of capital markets

Brooke Navarro, head of business and capital markets development at tZERO, an Overstock affiliate, explained how the blockchain will revolutionize Wall Street and capital markets.

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1 tZERO – Security tokens, the future of capital markets

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In the last few years, there has been a lot of talk about the potential blockchain to solve a myriad of issues from money transfers, to digital voting, to supply chain management, to securities transfers. However, one of the most compelling use cases for this technology is how it will change capital markets.

There are dozens of examples of frictions, inefficiencies, costs and opportunities for human error and mistakes in securities trading. For example, equity transactions require three days until settlement.

Adopting blockchain technology and digitizing securities will fundamentally change the way capital markets work. Over the next five years, the average investor will have access to the reserved assets currently only for the ultra-rich or connect, such as private equity partnerships, hedge funds, pre-IPO securities and more.

tZERO – Security tokens, the future of capital markets

Blockchain technology allows the tokenization of multiple types of assets, which are more flexible and incorporate data that currently requires significant manual work for confirmation. As a result, assets and securities that until now required intermediaries such as bankers and lawyers become viable and easy to trade.

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Settlement of digital transactions can happen in seconds without human intervention. In addition, companies can gain far greater visibility and better manage their relationship with investors.

Security tokens are ideal for trading assets that are currently privately traded – from modern art to cars and shares in various companies.

Security tokens will represent how the world will change and determine value. Individual investors will be able to purchase and trade them directly on their computers and smartphones, just as they are now trading shares and bonds.