Exchanges Explained
We traveled nearly all of Q4 in 2018 and spoke to almost one-thousand enthusiastic pioneers in the blockchain and cryptocurrency space this year at seven conferences on three continents. And nearly everyone we met along the way asked, “What does an exchange do?” Fortunately, the concept is simple. Modern exchanges are modeled after real marketplaces where buyers and sellers meet, make a transaction, and pay a fee for the service. To this day, vendors fill plazas, malls, and bazaars, and often pay a fee, or rent, for the privilege.
An exchange, like the stock market, makes the sale of shares in a company available to investors. Companies traditionally raise money through an initial public offering (IPO) putting the value of the company into publicly available shares, which can then trade on the open market. The trading price of the shares influences the value of the company.
In the Netflix series, EXPLAINED, (Season 1, Episode 7) the process of valuation and offering is put forth accessibly. And this video The Stock Exchange (for Dummies) covers the basics well. Everyday people actually do understand what an exchange is when it is put into simple terms. Jargon and technological gobbledygook have distanced people from institutions for too long. This next wave of fintech services will bridge the gap not only in services but also in language.
It’s about customers first.
“Our goal is to connect with customers first. We don’t want people to have to go through the headache we did just opening a wallet in Suriname,” explains OuroX CEO, Maya Parbhoe. “There’s too much opportunity and too many great people here to do nothing,” she continues.
“When you live here and you see the vibrancy of the culture every day you can imagine what life would be like with modern banking, with people able to freely trade and collaborate.”
As the Securities and Exchange Commission sorts through the legalities of tokenization at the end of 2018 it remains OuroX’s position that securitizing assets through a regulated process is part of how markets mature. There’s plenty of room for harnessing the pioneering spirit of early cryptocurrency evangelists within a regulated environment.
A new exchange has multiple user-groups, each of whom requires the ability for concurrent trades with regional legal considerations included. It allows for trading of stocks, futures, swaps, and derivatives from the major stock exchanges in the world, in addition to current digital asset value storage forms (crypto and alternative currencies).
Now, we’re starting to get into the money-word-stew again so let’s try a metaphor. Say all things stocks-related are marbles, and all things crypto-related are jacks, y’know, the ones kids play with. An exchange would be a sidewalk square where you can trade marbles for jacks all day, and everyone will walk around you. You pay a fee to play, maybe a marble or a jack. At the end of the day, a big kid will stop by and take a few of each. And then everyone goes home for dinner.
Why is this of interest to average people?
Well, for one, it is now possible to invest in exchanges and reap the benefits that banks and traditional financial institutions have been for centuries, as an individual. You can be part of bringing modern money practices (all the jacks and marbles) to parts of the world where traditional infrastructure just won’t exist. So, instead of paying to play jacks and marbles on the sidewalk square, you get paid a portion of the rent each time a kid steps up to play.
Modern exchanges rely on air-tight computer code. Every exchange is interacting with the application program interfaces (API’s) of countless other exchanges, evaluating smart-contracts, reconciling ‘know-your-customer’ protocols, and maintaining transactional integrity while processing concurrent trades. Security is paramount.
But function isn’t all there is. Design impacts adoption rates and ease of use. “We are creating a service that has to be easy for people. That’s why we’re providing customer service in multiple languages,” Parbhoe shares. “This is for the customer. If it’s too complicated, they won’t use it. And then, who’s it for?”
Today’s exchange allows markets to expand and evolve more rapidly bringing banking to the unbanked and financial simplicity to the rest of society. Parbhoe’s vision extends beyond the exchange to a logistics system that can modernize how goods are distributed in Latin America and the Caribbean.
To learn more about OuroX and their open raise on StartEngine, please visit: https://www.startengine.com/ourox
