As published on BlockTelegraph February 5, 2019

With the SEC promising to issue “plain English” guidance on security token analysis and the industry waiting for the first SEC-approved security token offering (STO), could 2019 be the year that security tokens become the fundraising tool of choice?

Security token offerings are well on their way to becoming a secure and stable method of fundraising. Last year as the number of initial coin offerings (ICOs) began to taper off, STOs were already taking over as an acceptable way of raising money.

Unlike utility tokens, where there are normally few (if any) rights accruing to the token holder, security tokens can offer investors ownership over a company’s tangible assets in a similar way to stocks and bonds, and they can represent the right to receive dividends, profits and voting rights.

In short, security tokens can be structured in accordance with securities regulations so that token holders’ rights can be very similar to what they would have if they had bought shares in a publicly traded company.

STOs in numbers

It’s no wonder then that last year more than 1,200 STOs were launched globally, according to a report published by InWara Research. In the U.S., despite the SEC not having approved a single STO, the number of launches grew by 60% from 174 in 2017 to just under 300 STOs by Q4 2018.

Although investments and trading STOs are still the most popular according to InWara, there are so many other use cases for security tokens. Security tokens that are held on the blockchain can be fractionalized, and this makes it possible for retail investors to put very small amounts into offerings from cutting-edge venture capital projects such as healthcare and gaming, to impact investing or real estate.

Working towards a legitimate new asset class

Many of us in the industry are working hard to develop security tokens, and the infrastructure that supports them, to be firmly in line with securities and regulatory requirements. With sound infrastructure in place security tokens can offer a wider range of investment opportunities to the investing public, with the possibility of secondary market liquidity.

In the U.S., security tokens can be issued under either Regulation D, Regulation S, Regulation A+ and Regulation Crowdfunding exemptions, all of which operate under different criteria. For example, the Regulation D exemption is usually used for accredited investors only and involves a minimum period that investors have to hold their tokens before they can be sold. Regulation A+ offerings, which have to be qualified by the SEC, allow non-accredited investors to invest and there are far fewer restrictions on resale. Nevertheless, all the regulations specify that token issuers must be accountable for their actions.

It is a nascent industry, but it is evolving quickly. A move to create quality investment products can already be seen from the increasing number of SEC filings for security tokens, and the foundations are being laid for an institutional-grade secondary market. Institutions are developing their own digital products. For example, Intercontinental Exchange (ICE) is about to launch Bakkt, a digital asset exchange.

Using trusted market infrastructure and creating high quality tokenized equity solutions for early stage companies will revolutionize the way we invest.

Waiting for the green light from regulators

Yes, we are still waiting for further guidance from the SEC, but there is pressure from all sides to bring regulations in line with more dynamic markets such as Switzerland.

Late last year, a bi-partisan bill was introduced to Congress which attempts to modernize the U.S. securities laws. The “Token Taxonomy Act” bill, introduced by representatives Warren Davidson and Darren Soto requests the removal of digital tokens from the definition of a security and requests that cryptocurrencies receive their own set of rules.

The aim is to provide light-touch regulatory certainty for businesses, entrepreneurs, and regulators in the blockchain economy and encourage innovation in the sector.

The Token Taxonomy Act is by no means a quick solution-it will certainly be some time before we see a vote. However, the discussion and clarification that emerges as a result will encourage excellence in innovation within the industry.

Security tokens can provide a valuable investment tool to tap into a growing number of alternative investment opportunities in global markets, with the very real possibility of secondary market liquidity.

We are all looking forward to the moment when the SEC qualifies the first STO offering, as that will indicate that the necessary market infrastructure components to support the burgeoning STO markets are now in place.

Learn more: https://launch.quantmre.com/about-eqre/

First published on BlockTelegraph January 28, 2019

At a recent crypto event in London, a quote flashed up onto the screen stating, “2019 is the year for Tokenized Securities,” and certainly the numbers being quoted about firms looking to list securities suggest that we are going to see a lot more coverage of the tokenized securities market. In the crypto world we have been here before, very recently, with initial coin offerings (ICO).

Why are security token offerings (STO) so fundamentally different? ICOs dominated media coverage between 2016–2018, and their rise in popularity was matched only by the speed of their fall. Whilst some projects were undoubtedly ground-breaking, the majority were not. All were underpinned by tokenomics, a pseudoscience of future consumption and demand that was elevated to the status of academic relevance.

Unfortunately, the reality is that the majority of these projects have failed and investors’ capital has been lost as a result. What then can we learn from recent history and use to guide the development of the tokenized securities market?

Here are my pointers:

First, hype does not equate to quality. Businesses can pay for coverage in certain media outlets, but these mastheads serve the advertising company’s interests far more than their readers’ benefit. Free from the security of independent journalists, a company can make any number of claims about a product or service.

The antidote is to look at the business offer, management team and their background and experience.

Ultimately, the question is: are they qualified to deliver on their forecasts? In talking about the crypto market, too often we hear that people under 35 do not buy securities and prefer to buy cryptos. Wind the clock back to 1999–2000, and the same claim was made around buying the stock of internet and web-technology companies rather than solid blue chips.

It was hype then, and it is hype now. People of any age buy securities, if they can see value. The protection that securities regulation brings to capital raises for companies developing and deploying this new technology should make STOs more attractive to investors rather than less so.

So, my second point is regulation. Securities are regulated financial instruments, and the regulation has existed for a long time to protect the rights of the investor. Any firm coming to market with a tokenized security that is not subject to regulation should be avoided, particularly if they claim they don’t need it. Regulation is there, it is well understood and institutions such as the SEC act to make the market work, for the good of all. In the U.S., the securities regulations that can be applied to STOs are more than fit for purpose. The debate should focus on clearing requirements and the use of blockchain, which brings me to my third point.

What is the blockchain application in a tokenized security market? The opportunity for the growth of the tokenized market is to be able to settle trading accounts instantly on the blockchain without the need for third-party intermediaries. The benefit for consumers is that less of their money is eaten up in administration fees. As a tokenized security can represent ownership in a company or other asset, the opportunity for the STO market, is to provide direct access (for retail investors) through fractional ownership to asset classes that were formerly only available to institutional investors.

Real estate is a key application of this tokenization process. In the future, we will see an increasing number of other illiquid asset classes, such as commercial aircraft for example, being fractionalized with tokens that could represent ownership, income or appreciation rights.

The critical consideration in all of these cases is that the STOs that are created will have the prospect of secondary market liquidity, and that really is the fundamental change that blockchain technologies and the new STO market infrastructure promises to deliver. The tokenized security market should be treated as any regulated market, with good governance acting to support the investor. The role of blockchain should be recognized for what it is; a trusted, efficient mechanic for processing trades.

It is, theoretically, a better way of doing business but there are caveats: can trades be processed at speed? Can operations and smart contracts be delivered cost efficiently and in compliance with international securities laws? All of these need to be proven before we get mass adoption.

While ICOs underpinned by the ERC20 protocol helped put blockchain on the map and certainly helped create a global retail investor market they should really be viewed as blockchain’s initial public outing and version 1.0 of blockchain’s potential applications.

The advent of tokenized securities issuance and trading will establish blockchain as a viable technological platform to build a Securities 2.0 capital markets system. This will not replace the existing multi-trillion dollar marketplaces in the near future, rather it will act as a parallel evolution of the existing framework, with the exciting prospect of increased efficiencies, reduced costs and greater access to capital on a national and international basis.

https://launch.quantmre.com/about-eqre/

Originally published at blocktelegraph.io on January 28, 2019.

Originally published in BlockTelegraph

Digital asset exchanges that use blockchain technology are looking at regulation as the next step to market growth. There are a number of exchanges that are developing their technologies to enable traditional assets such as bonds, venture capital, real estate and art to be tokenized and traded in a way that is compliant with local securities regulations.

Exchanges–no longer the wild west of crypto

We have come a long way from when the first exchange was founded in early 2010 to match buyers and sellers of Bitcoin. There are currently just under 230 cryptocurrency exchanges according to CoinMarketCap, and with millions of dollars traded daily, they play a crucial role by providing secondary market liquidity in the cryptocurrency economy.

A number of exchanges are focusing on the regulated securities token market, and we are beginning to see traditional broker-dealers working with technology providers to deliver regulated exchanges that build in systems to deliver the required security procedures, investor protection and internal controls in order to satisfy regulatory requirements.

Regulation good for business

Regulatory compliance is a positive development in the crypto economy and is particularly relevant for the process of tokenization of assets in order to create a pathway to liquidity. The surge in popularity of initial coin offerings (ICOs) that we saw in 2017 and 2018 raised the question of exactly whether tokens constituted securities.

As a result, the SEC took a number of steps to provide clarity as to what constituted a utility token and a security token and continues to provide guidance to the marketplace. In the U.S., tokens that could be considered securities (most likely by way of application of the Howey Test) need to be issued in the U.S. as a registered securities offering or may take advantage of one of the exemptions from registration, such as those provided under Regulation D, Regulation S or Regulation A of the Securities Act 1933.

As securities token offerings (or STOs) involve the issue of securities, they may only be traded on regulated exchanges. The existing exchanges, such as Nasdaq and other alternative trading platforms (such as https://www.otcmarkets.com) do not (yet) have the required technology to deal with the tokenized securities trading. Because of this, and in anticipation of the demand from security token offerings for a primary and secondary marketplace, a number of regulated broker-dealers are applying for Alternative Trading Systems (ATS) licenses that will enable them to operate regulated securities token exchanges in the U.S.

By focusing on regulatory compliance (customer asset protection, improved transparency, increased market surveillance and stringent IT security), digital asset exchanges will become the springboard for market participants to access new pools of national and international capital. By adopting regulated best practices, these crypto exchanges are expected, over time, to attract interest from the institutional investment community as well as from retail investors.

Innovation because of, not despite, regulation

Global regulators receive an unending stream of applications for market authorization, with some of the crypto-related products at the leading edge of innovation. As trading crypto assets evolve, so the traditional exchanges are also adapting. Conventional financial market players are realizing that there is value in trading crypto assets.

The Swiss Stock Exchange, in July 2018, announced that it is developing a fully integrated blockchain-based platform to tokenize existing securities and non-bankable assets. In the U.S., the Commodity Futures Trading Commission (CFTC), which regulates Bitcoin, has approved two crypto futures products: one from the Chicago Board Options Exchange and another by the Chicago Mercantile Exchange.

And in early 2019, the Nasdaq, partnering with Van Eck is planning to launch cryptocurrency products.

Infrastructure supports secondary trading

Digital assets are here to stay, and security tokens and tokenization of assets will add an important layer to the existing capital markets. With full compliance within a regulatory framework that protects issuers and investors, a new breed of tokenized exchanges will encourage more product innovation, providing much-needed access to new sources of capital with the attractiveness of a fast-path to liquidity.

STO issuances and securities token exchanges have the potential to quickly provide a sizeable, parallel financial services ecosystem that will be a valuable addition to the existing capital markets systems.

Advances in blockchain innovation mean that the real estate sector no longer needs to rely on dusty documents and traditional sales processes, because property titles, insurance, ownership transfer and escrow processes are all moving onto the blockchain. While buying a property will not be as quick and easy as buying a book from Amazon, for now at least, the world of real estate from home buying to property investment is about to be transformed.

Why change traditional house buying?

An EY report published earlier this year pointed out that residential real estate markets with their agents, brokers, attorneys, mortgage lenders, appraisers, title companies and more, form an expensive, time-consuming web. Current due diligence processes, looking into property titles, for example, can take weeks and, in some cases, months.

The constraints of the traditional real estate processes often include mistakes in land registry records, disjointed and inefficient systems of tracking within the sales process, lack of transparency, high and sometimes unnecessary fees, and even fraud. For both home buyers and property investors, money is wasted, and profits squeezed. Sometimes at the end of it all the sale falls through.

The current systems are operating at almost curmudgeonly levels, so it is not surprising that this industry is ripe for change.

Blockchain, the irresistible force

Enter blockchain. Blockchain is an encrypted electronic record of data on a distributed ledger where information is shared simultaneously and stored over a vast number of computers. The technology has the ability and flexibility to streamline business processes within the real-estate sector and much more.

One aspect with massive scope for change in this sector is the legal process. With its many third parties, time delays and lack of transparency, the legalities involved in buying property will be drastically simplified with blockchain.

For example, in the verification of property titles; a title record for a property could be used on the blockchain in the form of a smart contract. Smart contracts do not require a trusted third party and, when a property is bought and sold, the details are encrypted and added to the record. This means that there is a clear, accurate and immutable history of property titles over time which can be accessed instantly.

Innovation creates new approaches to real estate

This is not just hype. Some national land registries are starting to use blockchain, including the Swedish Land Registry, which is piloting a scheme and has reported positive feedback. Now in its second year, Digital Street, a UK Land Registry project, is exploring the use of blockchain technology and smart contracts.

The aim, of course, is to bring greater transparency, speed and trust to property transactions, which will improve the system and bring much-needed liquidity to the market.

But blockchain will also contribute to increased liquidity in other ways too; such as fractionalization of property. This is a radical new approach which is gaining momentum — being able to own units or tokens in residential real estate — and it opens up the market to people who would otherwise not be able to invest in this sector.

This form of tokenization will have a huge and far-reaching impact on the market. Property could be bought and sold at the touch of a button. But where does all this change leave the real-estate agents? Undoubtedly, their roles will change, but there is no sign of them disappearing any time soon.

With so many new concepts being developed, real-estate agents will have a broader range of roles and will be more productive in helping homebuyers through the process and offering investors sophisticated and tailored advice on their fractionalization investment options. There will still be a vital role for them to play.

Blockchain not only will improve the current processes of buying and selling property, but it will also revolutionize our traditional attitudes towards real estate. How we live, how we choose and pay for our accommodation and how we invest in real estate are all up for grabs.

Learn more at: https://launch.quantmre.com/about-eqre/

Thinking about adding on to your home? Whether you’re looking to create a rentable space to attract a tenant, or you’re planning for the care of an aging relative who needs a bit of help, but wants to retain a degree of independence, ADUs might be the best option. Not sure what an ADU might be, why you would want to invest in one, or how any of this works? Let’s break it down for you.

First, let’s address the question of what an ADU actually is. The acronym stands for accessory dwelling unit (ADU). It’s really nothing more than a detached structure that stands on property that you own, and is designed to accommodate the living needs of human beings, rather than being designed primarily for storage (like a shed), or livestock (like a barn). You may be more familiar with these buildings under another name, such as:

• In-law suites
• Granny flats
• Backyard cottages
• Secondary unit

A Look at the Benefits of ADUs

So, what are the benefits of going with an ADU, rather than investing in another piece of property or adding on to your existing home?

A Source of Income: One of the most popular benefits of an accessory dwelling unit is the fact that it can allow you to enjoy an additional stream of income, and become a landlord, without the need to purchase another home, or invest in a multifamily property. The right structure, equipped with a kitchen, bedroom and living space, can be comparable to most apartments, and rented out for whatever the current market in your area can bear.

No Need to Add Complexity to Your Life: It’s no secret that buying additional land, building a new home, or investing in an existing property, whether for personal reasons or to rent out, can be incredibly complicated and costly. ADUs give you the benefits of being able to invest in real estate, without the drawbacks that often go hand in hand with real estate investments.

No Need to Pay for Land: Land purchases can be quite complicated, and very costly. Finding the right piece of property can add months to your plans to create a rental property. With an ADU, you don’t have to worry about buying land, or the hassles that come with it, such as grading, adding a septic system, connecting to water or drilling a well, and the like. Because the dwelling is situated on your own land, you’ll have minimal hassle and cost.

Privacy and Proximity: For those who want to use an ADU to house an aging family member, and allow them to age in place, ADUs offer both privacy and proximity to the rest of the family. These detached units offer all the privacy of an apartment or condominium, but all the proximity of living side by side with family members.

Ample Living Space for an Affordable Cost: You’ll also find that ADUs offer comparable space to most condos and apartments, but for a lower cost. This allows you to make a smaller initial investment, or to get more bang for your real estate investing buck. It’s possible to design and build an ADU, include parking, and add upgraded features, amenities and materials, and still pay less than you would going another route.

The Same Utility Connections: One of the most important benefits of accessory dwelling units, at least for homeowners, is the fact that California law mandates that utility companies cannot require you to install a new electric meter, or even charge a new connection fee for sewer, water or power if the ADU is within the existing structure, and limits the amount that can be charged with detached and attached units.

As you can see, there are plenty of benefits going the ADU route. However, real estate investors and homeowners should understand that there are some drawbacks to these units.

The Drawbacks of ADUs

Now that we’ve covered some of the more important benefits of accessory dwelling units, we need to look at some of the potential drawbacks.

Cost: While accessory dwelling units certainly are more affordable than purchasing land and developing it, buying an existing home or investing in multifamily property, it does come at a cost. For many homeowners, that cost can be higher than what you have saved.

In quite a few instances, getting a home equity line of credit (HELOC) seems to be the best way forward, but that actually puts additional debt on your shoulders. A better option might be an equity share release that allows you to tap into your home’s equity without having to take on additional debt.

Laws: Accessory dwelling units are relatively new developments in the California real estate scene. However, they have been proven highly beneficial, and the state’s government is going to great lengths to require county and city governments to comply with new, ADU-friendly laws. While those laws are being implemented, and others are being developed, there’s a lot of confusion out there.

Moreover, the laws can vary greatly, depending on the type of unit you’re thinking about building, the laws governing your current residence, and other factors. There is also the possibility that the unit you’re thinking about building is actually a JADU (junior accessory dwelling unit) rather than a full ADU depending on its square footage, and where it will be constructed. This confusion and complication makes it necessary to work with a professional experienced with accessory dwelling unit construction and zoning in the state of California, rather than “just any old contractor”.

In the end, ADUs offer a lot of flexibility for homeowners, as well as for anyone interested in real estate investing. They can also allow the creation of potentially income-producing property without the need to take on an additional mortgage (when equity share release funding is used, at least), tremendous flexibility in terms of property configuration, and other benefits.

Learn more and join our wait list.

Originally published at launch.quantmre.com on December 17, 2018.

One of the reasons that many people are still on the fence when it comes to choosing to use cryptocurrencies is because this type of currency does not have any intrinsic value. The intrinsic value, sometimes called the inherent value or the true value, is the perceived value of something including the tangible and the intangible factors. Many do not see these types of currencies as having any real value, and instead, they see them as being ephemeral or even transient. They believe that they have value currently only because we say that they have value.

Is Not Having Intrinsic Value a Problem for Investors?

At the outset, this does seem as though it could be quite a large problem. After all, it can be rather frightening to think that you are putting your real money into investments of digital coins that are potentially fleeting and that do not have any true value. However, if this is one of the main reasons that you have not yet looked further into cryptocurrencies, you might be surprised to learn that there are other types of investments that are popular and common that do not have intrinsic value either.

For example, gold does not have intrinsic value. Neither does a grain of salt for that matter. The reason that the intrinsic value cannot exist with these items or with cryptocurrency is because the value is subjective. The only place that any value exists for these items is in the minds of the people who are trading in it and buying it. They have value imparted by the investors with essentially a belief of how much value it might have based on the usefulness of the item.

Some might argue that gold has true value because it can be used in different products. However, the value of those products is often based on the belief of what they should be worth, not the value of the metal itself. As times change, gold changes in value based on how we are using it and how much we perceive that we need it. There is a belief that if gold did have inherent value, then no change in circumstances would drop the price of gold to zero. However, there is a real possibility that gold could one day not have any value for humanity. Thus, many experts agree that it does not have intrinsic value, just like the cryptocurrencies that we have today.

Yet, just because something might not have intrinsic value, it does not necessarily mean that it is going to be a bad investment. You just need to make sure that you are careful with investments in digital currency, just as you would be with any other type of investment that you make. If someone would invest in other items that do not have a traditional intrinsic value, they might still want to consider digital currency. Yet, they do need to be careful.

Often, the idea of intrinsic value, or lack thereof in this case, can cause people to believe that an investment in digital currency is entirely different from other types of investments because of that quality. However, that’s not the case. Even though there might not be what some would view as a traditional demand, there is still a demand for this type of currency, and that means that it is possible for it to be useful for more than just the fact that it can be used as money. It tends to be all of the other benefits of cryptocurrency, noted below, that show people that the currency, along with the blockchain, can provide value.

Are Cryptocurrencies Right for Everyone?

Not at all. There is a risk with this type of investment, just as there is with many other types of investment. Before you choose to make an investment with cryptocurrencies, whether Bitcoin or another type of digital currency, you will need to do your research. You want to make sure that you are making the right choice for the amount of risk that you want to take with your investments.

There are some dangers when it comes to cryptocurrency investments, but those dangers are not always tied just to the intrinsic value. You should have an understanding of some of the basic pros and cons before you choose whether or not to make an investment in this type of currency.

First, let’s look at a few of the pros of using and investing in digital currency. First, there is a potential for these digital coins to become quite valuable. It is decentralized, which means that it can’t be deflated or inflated based on what a central government does. The transactions are fast, easy, and permanent, and the way the system works makes it easy to trade no matter where you might be in the world. The transaction costs tend to be low, as well. Additionally, you will find that more and more people and companies are accepting these currencies as a form of payment today.

One of the other large dangers of cryptocurrency is the fact that this market tends to be rather volatile. This means that there are often large swings in one direction or another when it comes to the value of the currencies. There can be high rewards, but it comes with high risk. You will need to make sure that you are willing to take those risks when it comes to investing. Another issue is that if a coin is somehow lost during a transaction, there is no way to get it back. This is part of the ephemeral nature of the coin.

While it can be viewed as a problem that cryptocurrency does not have intrinsic value, as you can see, that does not mean that it is necessarily a bad investment. As long as you are smart about this investment, as you are with all others, you will find that it can be a good option. Just make sure that you understand your investment and be sure that you are not only investing in digital currency, or any one investment type for that matter.

Learn more and join our wait list.

Cryptocurrency has been around for less than a decade at this point, and while there are a quite a few people who have invested in these digital currencies, it is still not a mainstream form of investment. There are a few reasons for this. One of the reasons is that there are still many people who are not entirely sure what cryptocurrency is or how they can use it. Fortunately, this is becoming less and less of a problem as time goes by. People are more knowledgeable about these digital currencies today than they were a few years ago.

With that knowledge comes another problem, though. It means that people can easily see one of the biggest flaw of this type of currency and investment. These coins are highly volatile. Look at the news and you can see that in 2018 alone there have been some massive swings in the value of digital currencies like Bitcoin. People who might have been interested in making an investment see this volatility and they get cold feet. They like the idea of cryptocurrency and all of the advantages of the blockchain, but they do not want to deal with the volatility.

Of course, some people are attracted to the volatility. They know that the cryptocurrency could drop in value, and that is a risk that they are willing to take because they know that the opposite can be true as well. They know that there is the potential for a great reward with this type of investment.
Still, it comes with a lot of work for those who want to take advantage of cryptos, and not everyone has the time or inclination to spend time watching the charts to know when they should buy or sell the coins. Many chose crypto coins because they wanted an investment that was going to be relatively easy for them to manage.

Because of the concerns that people have with digital currencies, it has greatly reduced the numbers investing in them. While the coins and digital currencies are doing well, they could be doing much better. However, mass market adoption of cryptos is not going to happen because of the volatility mentioned.

For that reason, stablecoins have become what many see as the shining light that attract more investors to digital currency over the course of the next few years.

What Is a Stablecoin?

Stablecoins can be confusing even to those who are involved with cryptocurrency already. These types of coins are going to have reduced volatility because of they way they have been designed. Some of the coins that are available utilize a fiat-collateralized system, which means that there is a central entity that is backing the currency, ensuring its stability. Another option are crypto-collateralized stablecoins, which are not centralized and have backing from the cryptocurrency itself through their reserves.

The most popular of the stablecoins on the market today is called Tether, but despite the popularity, there has been controversy surrounding this coin. This is a fiat backed coin, which means that it has a centralized system backing it. One of the reasons that many people first adopted crypto coins is because they do not trust these centralized entities.

There were sudden changes in the amount of supply that Tether had at one point, which caused many to believe that their fears about trusting a centralized authority. Some thought that they were trying to manipulate the price and popularity, mainly because the supply increase occurred at the same times as there were drops in the price of Bitcoin. Many wondered if they even had the money to back up the new supply.

Of course, Tether is certainly not the only stablecoin out there, and others are being developed, as well. Some are fiat backed, and others are crypto backed. This is still a relatively new area regarding digital currency, and there is not currently a “best” option for stablecoins on the market. However, those companies that are working on stablecoin projects are hoping to change that. They see this as the future of digital currency, and it very well may be.

How Else Can Stablecoin Help With the Adoption of Cryptos?

Not only will the stablecoin be a huge benefit to those who are looking to make investments and who want to have a stable way of making those trades with digital currency, but there are some other benefits, as well.

You will find that when the currency is stable, it is likely going to mean that more companies are going to be willing to accept that form of digital payment. Some of the companies that once took Bitcoin no longer allow the currency because of the massive shifts in value. With a stablecoin, this is not going to be a problem. You will be able to enjoy all of the same benefits that you would have with other blockchain currencies without the same drawbacks of volatility. It could be used with banking, the stock market, real estate investments, and a host of other areas, as well.

As you can see, there is a substantial amount of investment when it comes to stablecoins. They are also likely the only way that we will see the masses start coming over to digital currency. Even so, it is still likely to be some time before this happens. One of the main reasons for this is the fact that so few people know what stablecoin is or how it works. In addition, the companies who are creating these products are still trying to create the perfect coins.

Whether or not they are going to ultimately be successful is going to be up to the market. If they can come up with a coin that is transparent, easy to use and easy to buy, and that is decentralized — and it is marketed widely — it could be the next big thing in finance.

Learn more and join our waitlist: http://launch.quantmre.com/book

Originally published at launch.quantmre.com on November 14, 2018.

Over the course of the last decade or so, there have been some major shakeups and changes in the world of finance on several fronts. Not only has the United States gone through a massive recession and a real estate market crash, but we’ve seen the rise of what is, essentially, a brand new type of currency — cryptocurrency. While things have started to improve for the economy in the United States, as well as many other parts of the world, many are still waiting for cryptocurrencies to become more mainstream than they already are.

One of the ways that this is likely to happen is through asset based tokens. If and when this occurs, it is going to influence the stock market and other areas of finance in a massive way. It will all depend on a range of factors, though. While there are some companies offering investment in cryptocurrency and asset based tokens today, all of this is still relatively new.

All of the barriers to exchange need to be handled before this will take off, whether it is buying traditional cryptocurrency or the asset based tokens. Investors want something that they can understand, and they want to know more about the risk associated with these types of investments. Because they are new, there is still an element of mystery when it comes to the overall risk and how they can be used. The promise of something new has caused some institutional investors and traditional investors to sit up and take notice, though, and as this field moves forward, the interest is growing.

The idea of true asset based tokens, which have real and tangible value in the real world thanks to their assets, does seem very promising.
However, as more and more different types of assets become tokenized, this could change. If more companies that have offerings in the stock market were to adopt the use of blockchain technology, then it would almost be assured that the stock market would be entirely tokenized in the future.

Currently, there are many different types of assets that could be tokenized, including real estate. In addition, gold, oil, and carbon credits are assets that could be tokenized. It is even possible to tokenize stocks. With the benefits that this technology can offer, it is likely that this is going to be the direction that the stock market goes in the future.

Why Are the Blockchain and Tokenized Securities Attractive?

Why might more and more companies want to turn their assets into tokens using blockchain technology? The benefits go beyond companies that are involved directly with cryptocurrency, as you will see below.

One of the first benefits that the blockchain technology can offer, is the fact that everything is traceable and transparent. This means that it is easy to track assets and goods to know where they are currently and who is holding them, as well as the history of those assets. The transparency can help to reduce the instances of fraud and other issues that have often plagued the finance industry in the past. The transactions are all recorded sequentially in the blockchain, and they are kept forever. It is possible to see everything that has happened with an asset, which virtually eliminates the possibility of fraud, while making auditing much easier.

You will also find that there is a substantial amount of security thanks to blockchain technology. The technology will provide verification for all of the transactions that take place in the network. It becomes easy to share information, and overall, you will find that this tends to be an efficient and fast way of making transactions. The speed at which the transactions can be made is one of the reasons that this is popular in other areas, and this is likely to hold true when it comes to buying and selling stocks.

You will find that the benefits of tokenized securities tend to be quite similar, as they are based off of the blockchain technology. They are independently controlled, and they are easily moved. When you think about the way that other securities are typically handled, there are far more restrictions on them. That is not the case, at least currently, with tokenized securities. In addition, when this type of technology is applied to other assets, it has the potential to reduce the overall costs associated with them.

With all of the benefits that can be offered with blockchain technology and secured tokens, such as being faster and safer, it is no wonder many in the financial fields believe that it will be the future of not only the stock market, but also many other areas of finance and investing.

What Does the Future Hold?

Currently, we are still in the early stages of cryptocurrency, and asset based tokens for digital currencies are even younger. Because it is still so new, it is impossible to tell with 100% accuracy exactly what is going to happen with any of the cryptocurrencies. However, with the added security of tokens that are based on actual assets, there has been more and more interest from a range of different fields, such as real estate. When more items, and traditional assets that investors like, are able to become tokenized, there is a very good change that many more options on the stock market will use tokens, and they will be readily accepted as a common form of investment.

However, it does seem as though we are still at least a few years away from this happening to a major degree. Many feel that in the future, far more assets are going to become tokens, and this is truly going to change the landscape of finance. It will be interesting to see just how these asset based tokens affect the market over the months and years ahead. In fact, in Australia, the stock exchange is already getting ready to utilize a blockchain technology system.

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Originally published at launch.quantmre.com on November 5, 2018.

One of the single largest hurdles when it comes to homeownership is obtaining a mortgage loan. However, many homeowners find that they must apply for a mortgage more than once. There are plenty of reasons to consider refinancing a home — to take advantage of a lower interest rate, to take advantage of credit score improvements, to unlock equity in the home, and for plenty of other reasons.

Of course, refinancing is just as problematic as obtaining an initial home mortgage in the first place. There’s good news, though. Blockchain technology might be able to make refinancing a home simpler, cheaper and faster. What should you know?

First, let’s put a myth to bed. Blockchain has nothing to do with bitcoin, not really. While it does provide the foundation for cryptocurrencies like bitcoin and Litecoin, it’s not necessarily tied to those currencies. Blockchain is actually a distributed ledger that allows instantaneous updates to information, ensures complete security of the data stored within it, and does not need a central authority or controller.

Every user on the blockchain has a copy of the ledger. That copy is updated instantly when new data is added. This makes it a distributed database, and individual users utilize private keys so that they can sign transactions and keep information secure. Not only does that ensure complete security for the information, but it ties data such as transaction information to specific individuals. This is important because it has a direct impact on the utilization of blockchain within the refinancing process.

Here’s the important takeaway from this discussion. In most cases, providing verification of authenticity requires a third party. Tying transaction information to an individual’s identity requires using an additional service provider, which comes with additional costs and time factors. For instance, using a notary public requires both time and money. Using an escrow company or a title company also requires both time and money.

Delving into Mortgage Refinancing with Blockchain Technology

While the average real estate agent will likely not deal with blockchain technology in his or her daily duties, this tech will play a foundational role in how the mortgage industry works in the future, including refinancing homes. And, it all comes down to smart contracts — bits of code within the blockchain that ensure transactions occur exactly as they should, and are recorded in a public ledger system.

As American Banker points out, “The principal feature of smart contracts is the risk reduction available through nondiscriminatory execution, which for some, will lead to greater economic benefits. Put another way, it’s a smart contract’s lack of a central counterparty agent that will enable these contracts to service markets with greater efficiency.”

What does that mean in plain English? It means that every aspect of the refinancing process can be automated, streamlined, and improved. The conventional process to obtain a home mortgage can take between 45 and 60 days. Refinancing is not much better. With blockchain technology at work, some experts predict that duration could be cut down to less than a week, and the costs would be just a fraction of what homebuyers are now charged.

It’s Already Being Tested

Think that the use of blockchain technology in the world of home mortgages and refinancing is far in the future? Think again. It’s actually already underway. Bloomberg reported back in January 2018 that several major banks were involved in test projects.

Matthew Leising, writing for Bloomberg’s Markets segment, reported, “A group of big financial institutions wants to use the blockchain to make it easier and less costly to track home mortgages packaged into securities. Credit Suisse Group AG, U.S. Bancorp, Wells Fargo & Co., and Western Asset Management Co. said Thursday that they successfully tested the distributed ledger technology as a way to standardize the data involved in securitized home loans and made it more transparent.”

Now, yes, that applies more to how banks and lenders benefit from home loans than it does to how homeowners will use blockchain technology to refinance their homes, but the seeds are there.

Benefits of Blockchain Technology for Refinancing

In order to truly understand why blockchain would be used within the refinancing process, we need to drill down into some of the benefits afforded by this technology.

Credit History: One of the most important benefits of using blockchain technology in the refinancing process is that consumers could provide their credit history for lenders immediately, with all the information in one central place, and tied directly to their identity.

Income: A consumer’s income information would be readily available to lenders so that an informed decision could be made quickly.

Property Value: The value of the property in question would be apparent immediately, with no need for digging.

Title Encumbrances: All title encumbrances, such as liens, would be disclosed immediately, removing the need for additional research and using additional third parties.

Proof of Ownership: Homeowners would be able to provide lenders with an unbroken chain of ownership, providing their stake in the property.

Documented Lists of Repairs and Improvements: A property could have its own digital identity, including a documented list of all repairs and improvements made that might affect its value.

Additional Financing Options: For homeowners, another benefit of blockchain technology in the refinancing process would be the ability to go beyond conventional lenders. Peer-to-peer lenders, property investors and others could become viable sources of funding for consumers in this instance.

In the End

When it’s all said and done, blockchain technology has a lot to offer the mortgage industry. However, while it is being explored currently, don’t expect drastic change to come quickly, particularly when it comes to traditionally conservative financial organizations. Alternative sources of funding are rolling out this technology much more quickly, though, providing homeowners with an immediate avenue to receiving the funding they need.

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Originally published at launch.quantmre.com on November 1, 2018.

The basic definition of this type of cryptocurrency is that it is a digital currency that is price stable. You will find that many of the typical cryptocurrencies with which people are familiar, such as Bitcoin, Litecoin, and Ethereum, there is a substantial amount of volatility. The prices of the coins are not stable at all, and they can increase or decrease drastically. While this means that there tends to be a large risk/reward with these currencies, it is not a risk that everyone is going to want to take.

Because of this volatility, it has caused some companies that were considering taking various types of cryptocurrencies for their payments to rethink their decision. They do not want to take this form of payment only to find out that after someone makes a large purchase, the value of the currency has dropped.

When you look at the concept of a stablecoin, you can quickly see why they are so important. These coins are essential because they are going to have the potential to create more stability, as the name would suggest. Many in the field believe that these types of coins are going to become more important than Bitcoin and other common cryptocurrencies that suffer from the problematic volatility that pushes away potential investors.

Stablecoins Currently Available

These stablecoins are starting to gain more momentum, and there are already about 25 stablecoin projects that are underway according to the Stablecoin Index. Some of the items that are on this list include Tether, TrueUSD, Globcoin, Stably, and Stasis to name a few of the fiat-collateralized stablecoins. There are also crypto-collateralized stablecoins including bitUSD, Dai, and Sweetbridge. Some of the lgorithmic supply stable coins include Basis, Fragments, Carbon, and Kowala. Other stablecoin options are available, as well.

All of these are relatively new, and they have not had quite as much attention in the media, or even among cryptocurrency enthusiasts, as other types of coins, such as Bitcoin and Litecoin. As more and more are starting to look into investing in this field, the attention being paid to stablecoins is starting to increase though.

Types of Stablecoin

As mentioned above, there are several types or categories of stablecoins that are being developed. It is important to have at least a basic understanding of what they are and how they work.

The fiat-collateralized coins are going to have more of a centralized structure than any other types of blockchain currency. Of course, if you know anything about cryptocurrency, one of the main reasons that there were early adopters and promoters was because it is decentralized. This is not the case with fiat-collateralized coins. This is one of the simplest ways to create a stablecoin because it is going to be based on reserves that an entity, such as a central bank, holds.

One of the coins above, Tether, uses this method. However, it is not without its problems. It has reportedly had issues with the auditors for the coins. As with any fiat-collateralized coin, those who are going to invest in the coin also need to trust the entity that holds the reserves. This is often problematic. Not only have some companies had issues like Tether, but people who tend to be interested in cryptocurrency are still wary of anything that is centralized. It is likely going to take time to resolve these issues.

The biggest benefit of this option is the fact that the coins truly are going to be stable, as long as the issuer is honest about the central entity that holds the reserves.

Another option for stablecoins are the crypto-collateralized option. Those who want to take advantage of the decentralized nature of cryptocurrency are going to want to consider this option. These coins are backed by the cryptocurrency reserves, and they are typically going to be decentralized. While this has some advantages, as it means that more of the current crypto enthusiasts are likely to choose it, there is a disadvantage. These coins are still likely to suffer from the volatility of digital currency, unless they are “overcollateralized”.

Creating Stablecoins Can Be Difficult

Many companies are trying to create the ideal stablecoin that is going to last and that will appeal to a large number of investors. However, the creation of these coins is not easy. There are many factors that need to be considered. They need to be truly stable, and a part of that will depend on economic security.

In addition, the mechanics of the token and how it works in practice are going to be important in determining whether someone wants to adopt and use the coin. In addition to the design of the coin, it will need to be adopted quickly and by a large number of people in order to become stable. This is a tall order, but companies are hoping to create coins that can finally get more people to adopt cryptocurrency and the blockchain.

It is still relatively early in the life of cryptocurrency, and the stablecoins are even newer. They are likely to continue going through growing pains over the course of the following months and even years. However, when stablecoins are perfected, or at least improved further, there is a good chance that even more people are going to want to start using them.

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Originally published at launch.quantmre.com on October 30, 2018.