The sharp drop in video game retailer GameStop’s stock in January was the moment r/WallStreetBets finally transformed itself from a humble Reddit forum into an economic force that can no longer be ignored. But losing between memes, trading in applied drama and the ups and downs of stock market sanctity was the unexpected result: Not only did GameStop’s stock price soar — the company actually listened to several new retail investors and aggressively reinforced its strategy of focus. on online trading. Instead of a one-time market crash, r/WallStreetBets users’ investment led to a real turnaround for the company, which many on Wall Street predicted would soon be gone.
Related: GameStop Unwittingly Paving the Way for Decentralized Finance
You would think that the people on Wall Street and the fan club in Congress would regard this as a rare victory for market evangelism. But the wrong people made money from this incident, so the GameStop episode was a serious coincidence in their eyes.
The stock market is still in the hands of self-dealing and corrupt institutions. But just because the traditional market is rigged with rules that change according to the sentiments of the elites does not mean that ordinary retail investors should abstain from any control over shareholders and stop trading stocks altogether. Alternatively, a hybrid model that includes cryptocurrencies and tokenized stock deposits of companies into the blockchain ledger so that people can buy, sell and trade can help build a better, more transparent and accessible stock market.
Since I founded the r/WallStreetBets subreddit in 2012, the community has grown and gone through a number of changes. Until recently, discussion of cryptocurrencies among r/WallStreetBets users was limited. But the popularity of innovative trading apps has helped narrow the gap between stocks and digital assets. R/WallStreetBets’ latest initiative aims to create exchange-traded products, or ETPs, that function like traditional ETFs, but instead allow community members to buy shares indexed in cryptocurrencies, as well as shares in companies like Tesla or Facebook.
If more companies are expected to tokenize their shares on the blockchain in the future, it will not only help create a more democratic market, but will also benefit from a number of technological advances and access to a powerful army of retailers. investors.
On the topic: Understanding the systemic transition from digitization to financial services tokens.
Financial Services Coding
As a friendly market can be for large institutional players, old methods of raising capital still pose a number of problems and protocols that are outdated for most companies. The strict rules of the exchange help some more than others, as does the willingness of banks and financial institutions to lend and common problems of business owners who persuade private investors to participate. With the tokenized shares on the blockchain, the issuance of shares offers lower costs and more flexibility in raising funds. Thus, ordinary investors have a greater voice and company values are more in line with market forces than the elite group of wealthy investors.
Instead of forcing people to guess decisions made in smoke-filled backstage rooms, token shares are traded on the blockchain in a straightforward manner, with greater openness to both regulators and contributors. Regulators have the ability to track large spreadsheets and share activity information instantly, as well as see votes in favor of corporate governance. Shareholders, whether they are studying algorithms or incentivizing YOLO dollars on meme stock, can see the entire chain’s activity in relation to the stock sale, as well as other shareholders’ voices on company decisions. Such a system is more fair than the status quo for all participants.
Our old system restricts shares by jurisdiction, which means that a Portuguese citizen is prohibited from investing in companies that may even operate in his country. If you ask me, anyone who sold a Wii for 3€ or 550 yen should be eligible to throw money at GameStop. But the blockchain-based system makes the stock token universal and available 24 hours a day, 7 days a week, 365 days a year. In addition to providing more access, this transformation eliminates flashback trading and dark trading, allowing institutional investors to trade without disclosing information and publicly display their intentions when searching for a buyer or seller. The ETP R/WallStreetBet initiative overcomes these built-in biases and removes the advantage that large organizations abuse to strike inequality-enhancing secret deals.