I am glad to announce Blocktrade.com, a high-performant, soon-to-be MiFID II regulated Crypto Assets Trading Facility.
Couple of years from now financial markets will look rather different.
Combination of new technologies, paradigm shift and regulatory changes will have a major influence on how startups and small & medium-sized enterprises (SMEs) raise capital.
Current situation
In the old financial world entrepreneurs have to go through living hell to raise some capital. Pitching their idea hundreds of times to select angel investors and VC funds just to get rejected again and again. Even for great ideas that later turned into unicorns, founders had to use every trick in the book to persuade investors to give them some capital so that they can build their idea into the product or service and later into a profitable company.
Average investors on the other hand did not even have the access to startup investing. Opportunity set that VCs have give them an unfair advantage in achieving high returns (though the risks are also substantial).
With the “invention” of blockchains and especially Ethereum network, things started to change.
Startups now have the ability to issue their crypto asset (utility tokens or tokenized securities) easily and in a decentralized fashion, which means that they are not limited to VCs anymore. There is obviously lots of capital on the sidelines ready to be deployed into more risky assets, which can be seen in the amount of money raised by Initial Coin Offerings.
But issuance of crypto assets has become too easy to do. From technical perspective everyone with slight knowledge of computer science can create a smart contract on Ethereum network which essentially acts as a crowdfunding platform gathering capital from investors and giving them newly created crypto assets in return. A true financial paradigm shift based on a couple of lines of Solidity code.
From regulatory perspective there were no major/mass legal actions or implementations of new regulations that would limit the exponential rise in fraudulent ICOs while allowing the new way of startup financing.
The combination of the two created a wild west in the new financial market where many investors lost large sums of money. A website and a poorly-written 10-page document have become enough to raise millions of dollars from investors who get no legal safety by buying these crypto assets.
The future
Technology is making it even simpler to issue your own crypto asset, which is amazing and really useful. Reasonable regulations have also started to pop-up in some countries, which means that even more startups will seek funding from crypto investors as regulatory uncertainty lowers.
Soon we will also see regulations that will allow issuance of true tokenized securities, either stocks, bonds, or some other financial instruments. All of them fall in a group called Crypto Assets which includes cryptocurrencies and utility tokens.
Companies, large and small, will be able to offer their tokenized stocks/bonds to the public while still complying with the regulations (publishing a prospectus, being transparent about their accounting data, just as current public companies are).
This surge in financing will probably have a large positive effect on economic growth as most jobs are in small and medium-sized enterprises. More startups also means more disrupting technologies and faster application of technology to real-world use cases.
From the investors’ perspective this will mean an order of magnitude larger opportunity set where there is millions of stocks to choose from and not only forty-five thousand currently listed on stock exchanges around the world.
This is where Blocktrade.com comes in…
We believe that tokenized securities are a logical next step in the evolution of global financial markets. There are many advantages of using tokenized securities for fundraising and trading. Superior speed and simplicity of issuance, near-instant settlement, ease of transferring, fractional shares, etc.
In the next decade Crypto Assets will overtake the financial world and Blocktrade.com will be the Trading Facility where these assets will trade.
By building software architecture that has supreme performance capabilities we will be able to ensure that hundreds, maybe thousands of crypto assets will be traded at Blocktrade.com.
We are using the most recent advances in computer science to achieve that goal. Continous integration and deployment, dockerization, using OpenShift for DevOps, optimizing performance sensitive code by using faster programming languages, integrating faster and more reliable API protocols like FIX and FAST, etc., all being deployed in a high end dedicated server cluster located in Switzerland.
By applying for a full MiFID II license we make sure that other financial institutions and investment firms can become members of our trading facility which add value to them by offering additional asset classes to their clients, and giving us increased liquidity and volume.
As most crypto traders and investors often complain about poor customer service from current trading venues our focus from the start will also be in building a top-notch customer support team and customer experience.
Lowering the barriers
Although the technology makes is easy to issue crypto assets, listing them on crypto exchanges has become bizarrely expensive. Our view on listing new crypto asssets is different.
First, the issuer must comply with all the rules and regulations which means that in a case of tokenized securities issuer provides a prospectus and is fully transparent so that investors can do their due dilligence. This includes presenting a detailed business plan, full disclosures about the management and potential conflicts of interest, etc.
Secondly, the listing itself should not be the expensive part. Issuers must rather invest more time and money into preparation of the prospectus so that investors know what they are investing into.
Thirdly, issuers must keep the shareholders updated with truthful and recent data, which again can be easily achived by using new technologies.
From the investors side we are also trying to remove as many frictions as possible. By building a easy-to-use yet still powerful user interface we aim to lower the learning curve for using the trading platform. Great user experience makes it easier for investors and traders to focus on their investing/trading process and not on learning the tools for trade execution.
Trading fees can also present a barrier in a sense that some opportunities do not look attractive after incuding the fees into calculation. Our goal is to offer lower trading fees across the board and by using subscription model giving the opportunity to more frequent traders to lower the fees even further.
We will use our own Blocktrade.com token which will be created as an airdrop to current holders of HDG when we launch in couple of months (targering April/May) as a utility token for lowering the fees even further.
Partners and members
We believe that changing how the financial system works is quite a responsibility which must be shared. If you represent a regulated investment firm please reach out to us so that we can build improved and more fair financial system.
By connecting to a new trading venue with new asset class you can unlock additional value for your clients (if you are a broker) or reach for the trading opportunities yourself (if you are an asset manager).
