Blackrock’s CEO Talks About Tokenizing the Stock Market
The history of the stock market and the selling and purchase of stocks is long and arduous. Although you may not realize it buying stocks once meant you had to travel to a certain location (or have someone travel on your behalf) and return with a printed certificate establishing your shares.
Unfortunately for you, these certificates were easily stolen, and if your house burned down, you were screwed. Thus, many individuals purchased fire-proof safes in which to store their stock certificates.
Of course, the times have changed, and now days, you can trade stocks comfortably from your home via an app on your phone, and log into your account to see your current holdings at any time. Sure, it is a bit arduous to set up an account with one of the many market makers, but it's not 48 hours on the back of a horse in the Wild West either.
The CEO of Blackrock, Larry Fink, is insistent that this isn’t the final evolution, however. So read on to discover where he thinks the world of investing and stock trading will go next!
Why We Should Tokenize Stocks
Larry Fink, the CEO of Blackrock, is adamant that stocks should be tokenized, just as NFTs and other stablecoins currently are. He believes that doing so would make it much easier to trade stocks, more transparent, and simpler to regulate.
Do we agree here at MintDice.com?
Actually, we do. Currently, the stock market is rife with white-collar crimes, like insider trading and several cases of illegally influencing stock prices. Tokenizing stocks could help put a stop to some of this crime, by creating protocols that could stop large organizations from buying their own stock and prevent employees from making sales prior to a major stock-affecting announcement.
Additionally, tokenizing the stock market, including the real estate market, using protocols would lessen the need for expensive services, like escrow services, when buying a house. This would make large investments more accessible to the masses.
Not only that, but trading tokenized stocks would be faster, easier, and cheaper, all good things when it comes to day trading. Plus, Fink insinuates that tokenizing stocks could help lower the grip that market makers currently have on the economy—meaning you could trade directly with a person if you wanted. This would also lessen the need for individuals to hire someone to trade on their behalf, making stocks more accessible to the lower class.
Obviously, we have some questions about the protocols that would be established and how everything would be regulated in terms of privacy, but overall, it’s hard to see a downside to the tokenization of the stock market. Larry Fink is a smart man, and with trillions of dollars at his fingertips, we are sure he knows what he is talking about.
Of course, there are many individuals and industries which are against this tokenization, and if you look into it, it’s easy to deduce that they feel this way because the profit heavily off of the current system.
Related: How to Tokenize an Asset: Exclusive Guide
Are There Downsides to Tokenizing Stocks?
Like anything in life, there are both good and bad things about tokenizing assets like the stock market. While it does make it cheaper, easier to regulate, and more accessible, we also have a feeling it would make it less private.
How? Well, one of Fink’s main pros of tokenizing the stock market is that there would be less insider trading, and companies able to proposition stock releases so they benefit them. Fink has a lot of ideas on how they could set up protocols to stop these things, and we have to say they aren’t very private.
Now, he doesn’t mean he will be broadcasting everyone’s identity, but either the system will have a ledger like Bitcoin, which can be traced when necessary, OR a system of digital identification using zero-knowledge proofs will be set up. While we are pro digital identity (as this would also lower election crime) it’s hard to have a system which is truly decentralized, meaning someone, somewhere, would have access to the information.
The transformation of the stock market into tokens isn’t happening tomorrow, and we are sure that Larry, or other financial analysts, will figure out a viable method to do so. We just hope that the money-hungry government isn’t able to block their innovation.
Related: The Best Bitcoin ETFs to Invest In
What Should You Do?
Currently, the idea of tokenizing the stock market, is just that, an idea. If you have strong feelings about the topic, you can always spread the word or write a letter to your local lawmaker. Most congressmen and senators welcome conversations or letters from individuals about this type of topic.
The way that Larry Fink puts it, however, is that the tokenization of the stock market is inevitable and has already been put into motion because of the approval of Bitcoin ETFs in January 2024. While we aren’t as confident that this is the case, we must admit that technology is changing, and we do agree it is time for the stock market to catch up.
There isn’t anything for you to do instantly but keep an eye on any financial accounts you may have with market makers. You never know when they may offer an opportunity to try out a new feature akin to tokenization. It’s also important to stay up to date on the technology behind this type of thing, blockchain, which is quickly evolving. We recommend following an informative technology blog or signing up for notifications. Medium and Publish0x tend to be excellent free news sources that post frequently about tech.
Just keep in mind that the media is big business, so take anything you read at face value, read multiple sources, and always research claims before deciding how you feel about them.
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