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.
Efficiency, in my opinion, is half the story in democratizing financing and investment with blockchain technology. I have delved into the price discovery, agility, and matching aspects of efficiency in the previous three chapters. The other half of the story, which is often overlooked in similar discussions, is what kind of efficiency that comes out of a solution: Is it where one powerful entity dictates and others follow to pick up scrubs, or is it where constructive interactions take place among all stakeholders? I believe in the latter, because it is a more robust efficiency. In the last two chapters of this 9-part series, I will discuss transparency and standards that guide us towards achieving that goal.
When it comes to transparency, blockchain is a peculiar case: On the one hand, some argue that public ledgers greatly enhance transparency, and that codified rules make any breach abundantly obvious, if it ever takes place. On the other hand, these characteristics have brewed a prevailing sentiment that since code governs the transactions, human intervention is unnecessary and, indeed, undesirable. My take is simple:
There is transparency in transactions, and there is transparency in financing and investment — these are two different concepts.
Currently, many intentionally or unintentionally obfuscate this issue. Likewise, financing and investment usually lack transparency and proper governance mechanism outside blockchain, particularly in the few alternatives that deal with real-world assets: collectibles, real-estate, infrastructure, business assets, and inventory, etc. are not sectors known for being transparent. Indeed, one may posit that financial crimes are prevalent.
IdeaFeX aims to inject transparency into financing and investment with real-world assets. Our two weapons are, as discussed earlier in this series, openness and navigability.
Our openness allows for a diverse mix of stakeholders to interact organically. While one may suggest that over-reliance on diversity could reduce short-term efficiency, we must highlight that this diversity is based on interests: in other words, organic interactions are fostered among a diverse mix of stakeholders who are all enthusiastic about the prospect of the underlying project. As a result, the efficiency tradeoff is less likely to be noticeable, while the stabilizing effects of diversity are augmented.
Our navigability further allows for fundraisers to share information and for interested investors to discover it. This in turn bolsters the quality of the diversity and make interactions and communications more worthwhile: As touched on in the previous chapter, financing and investment are no longer a means to an end — instead, our solution transforms interactions between the two sides into a more symbiotic relationship where knowledge and expertise are also shared. This additional advantage gives companies who choose our solution a competitive edge in today’s mercurial markets.
To leverage this unique combination to the full, we will integrate, as discussed in our White Paper, official channels of communication that give voice to authentic information and verified stakeholders.