Did blockchain just issue its first stock?
Symbiont, an interesting blockchain start-up, claims to be ‘bridging the gap between emerging blockchain ecosystem and Wall Street.
This will be achieved by issuing its founder stock, convertible preferred stock and convertible notes on Bitcoin’s increasingly popular distributed ledger known as The Bitcoin Blockchain.
THE NUTS AND BOLTS OF SMART SECURITIES™
At first it feels just like any other electronic trading platform. A trader, or investor, gets access through the company’s web-based front end or API, and is able to see the ‘market’ for the security in which he or she is interested. A refreshingly simple system shows ‘red’ for a holder of a stock who is not interested in selling, ‘yellow’ for a holder potentially interested in selling at a certain price, or ‘green’ for a holder ready to trade promptly. When parties agree a price to trade, a verification process confirms 1) that you are who you say you are, and 2) that you have the money and the security, respectively, to complete the trade. Since Symbiont’s technology is directly ‘plugged in’ to banks’ back office trading systems, authentication and authorization is relatively seamless. For customers being represented by broker/dealers or other organizations, a ‘multi-signature’ procedure is used in which both the clients ‘private key’ and the representative’s ‘public key’ must be verified to allow execution. Obviously to be successful and provide the liquidity essential for any trading platform to succeed, Symbiont hopes to sign on the majority of traditional Wall Street trading firms.
WHY IS IT BETTER THAN ANY OTHER ELECTRONIC TRADING PLATFORM?
With their new blockchain approach, Symbiont promises an ‘immediate and immutable’ copy of all trade information for all parties to see, eliminating the need for confusing and costly reconciliations that have plagued bank back offices for years. In addition, the terms and conditions of the contract are programmed into the security; the securities receive data from market data feeds which trigger corporate actions or restrict the transfer of the securities based on those terms. This removal of the need for banks to provide continual cash maintenance of complex, long-term deals could be one of the first viable and most valuable outputs of the solution overall. One of the potential drawbacks however could be that this type of trading only allows for ‘full and real’ ownership of the asset, not a marginalized model as with most traditional clearing relationships. The jury is still out on the timing and magnitude of blockchain technology for financial services, but one thing is for sure – Symbiont has just made the advent of this new model impossible to ignore.