In this Make Blockchain Work series, I discuss how blockchain technology could be best applied to financing and investment in nine chapters. It is from these reflections that we devised the world’s first marketplace for tokenized real-world assets, IdeaFeX. I prefer not to touch on ideological or debatable subjects, because a strong business model must be built on resources, including technologies, available now while thriving on agility to adapt to future developments. In this series, I will insert some of the posters that we have published on our social media platforms.
Another quality that is not necessarily at the core of blockchain is functional features. In fact, the very first adopters, while chanting for broad adoption now, have always taken pride in the exclusivity in the knowledge of how exactly the technology works. Granted, the general public can hardly benefit from such deep knowledge: the pride in having the knowledge means there is little willingness to accommodate the public; instead, early adopters want to “educate” the public so that they can accommodate themselves.
This is not how fintech succeeds.
Fintech is about applying the efficiency of new technology to make it available to the public. Clearly, functional features sit at the core of making technology available and creating value in the process. To that end, IdeaFeX prioritizes three sets of functional features: adaptability, real-world assets, and interactability.
First, we want to give the users more control in how they use our marketplace. Compared to traditional financial markets plagued with organizational and technological inertia, we are agile in adopting technologies and services, including those unrelated to blockchain, to improve efficiency and robustness. At launch, we will allow our investor users comprehensive control of their funds and assets, a feature that many cryptocurrency exchanges have made standard. With us, this extends to fiat currencies, notably Euro, because we understand that many investors are interested in more liquid forms of real-world assets but not in cryptocurrency. Further, we will allow users to customize with a simple menu how they want their search results to be displayed. This serves to make our marketplace fit like gloves when critical financing and investment decisions have to be made, thus further improving the user experience.
Second, we democratize financing and investment by applying blockchain technology to real-world assets (discussed in the previous chapter). Thereby, we strive to make blockchain work for the world that everyone is familiar with, regardless of their opinion of cryptocurrencies. We also recognize that merely “tokenizing” assets like ICOs does not make sufficient difference for our users. Being a gatekeeper, we must enforce high standards that match or exceed traditional, existing alternatives in order to excel. This means sensible accounting and custody requirements; it also demands new means to ensure a level of transparency unmatched by traditional markets. This leads us to the next point.
Third, we empower fundraisers and investors by making communication and interactions on IdeaFeX easy. From the information dispersion point of view, this helps users secure the integrity of their information and save them from the destructive effects of fake news. More important, fundraisers can now engage their own investors more readily and leverage their knowledge, experience, and enthusiasm to achieve more. Investors can also engage (since this is a multi-lateral process) other investors or the fundraiser to make better investment decisions and to collectively push the community forward. Concretely, each asset listing on IdeaFeX will have its own news updates and discussion threads. By removing the need of concurrently having numerous “official channels”, it is easier both for fundraisers to manage and for investors to participate. Further, our listing standards include the requirement for transparency, even for assets that are not securities (and thus not required by the regulators to do so).
Before concluding this article, I should like to talk about the point of decentralization. In our application, the transactions of tokenized assets off IdeaFeX are decentralized, using the blockchain that the fundraiser chooses at the time of first issuance. IdeaFeX as a marketplace is indeed centralized. This goes to the question of what is better decentralized and what is not. We believe that our model serves the community the best. It also makes for a profitable business model that makes sense for us and our investors.