While an abundance of hype surrounds the capabilities of blockchain technology, its ability to transfer equity using tokens as digital securities has been demonstrated.
Medici Ventures, the leading blockchain accelerator and subsidiary ofOverstock.com, Inc., has successfully conducted a digital securities token transfer representing its equity ownership in Chainstone Labs, a company focused on digital securities and decentralized asset management.
“Since we focus on securities tokens, it’s only natural that we have a digital security for the equity in our own company. The ease of moving digital securities has the potential to change the way the global economy works. Medici Ventures has the operational expertise to help us pursue this market,” said Chainstone Labs CEO Bruce Fenton, who also owns Atlantic Financial, a full-service investment firm and the Satoshi Roundtable, a leading invitation-only gathering of industry members.
Medici Ventures purchased a 29 percent stake in Chainstone Labs for $3.6 million. The digital security was issued by Chainstone Labs using the Ravencoin blockchain, an open source, public blockchain built specifically to help users create and manage tokens and digital assets such as securities.
“Ravencoin is an ideal protocol and chain to use for this security token. The aim of Ravencoin is to do one thing and do it well: help users issue tokens and digital assets securely. Tokens, particularly securities tokens, are a promising area for blockchain technology,” Fenton noted.
While the equity token is not offered to the public, the transaction, which was broadcasted in real-time, shows the simplicity of transferring equity using tokens as digital securities. This is also revolutionary as the Chainstone digital security token is one of the first equity tokens issued using a public blockchain, which is also believed to be the first major security token issued on the Ravencoin network.
Moreover, Fenton points out that transferring digital securities is one of the few use cases where the application of blockchain technology actually makes sense.
“I think blockchain technology has shown that it’s really good at moving things of value around without requiring a trusted third party. Of course, this can apply to a lot of applications, but I think securities are one of the major use cases here.”
According to Fenton, the reason it’s difficult to own and move stocks currently is due to the way that ledgers work.
If you want to have something that really trades freely in the world, it typically has to be publicly traded. For instance, in America you need to be on a fully registered exchange with the SEC, which is quite difficult. Stocks can also move legally, but there is mainly an issue with the ledger behind all this. The reason one doesn’t typically own $100 worth of shares in a local restaurant is most likely due to the difficulty of maintaining the ledger. But blockchains change all of this, making it so a broker or a company doesn’t need to run a ledger. Rather, the ledger is run by the people in a distributed manner. This has unbelievable potential to change the way that stocks move in the world,” Fenton explained.
Changing The Global Economy
In addition to demonstrating blockchain’s use for transferring digital security tokens, Jonathan Johnson, president of Medici Ventures, believes that the company’s investment in Chainstone Labs is a step in the right direction for changing the global economy.
Chainstone Labs shares the same vision of Medici Ventures, which is blockchain is the future and using it to make transactions faster, more secure, and completely transparent will change the world,” said Johnson. “Our mission is to use blockchain to democratize capital, eliminate the middleman and re-humanize commerce. We believe our investment in Chainstone Labs is a huge step forward in that mission and will help change the landscape of the global economy.”
And according to Fenton, the goal of Chainstone Labs is to help people acknowledge a new world of securities, particularly that of equities, and to help manage money in revolutionary ways. In particular, Fenton points out that voluntary risk can now be shared across a blockchain network.
I believe blockchain technology has the potential to change the way in which stocks and equities currently work. The economic impact could be as significant as the Internet, as it could change the way people interact and view value. For instance, if you think in terms of shareholder value, distributed ledger technology improves one of the greatest things that equities do, which is help people share risk in a voluntary way. If we can make equity move better and have it transferred around the globe, we can change the world completely in the sense of how the economy works.