One obvious and yet complex use case of Ethereum (ETH) is dApps but securities is an area that the team has not exploited. Securities on blockchain cannot be stolen, manipulated or forged and that is why the system is set to be the securities hub. Securities are usually traded in money markets and can easily be forged.
The Ethereum contracts are easily created and assigned values in the same way securities are notarized thanks to the power of the new technology. This has prompted the Austria government to turn to the platform to issue bonds which will lead to tokenizing securities.
The Ethereum outfit has been the preferred destination for most ICOs and the same qualities can be used in the securities. This will imply that the securities are secure and easily accessed throughout the network. This also makes the retrieval process fast and less resource intensive.
European Union Tokenization Underway
The European Union has taken the first step in tokenization through DESICO a regulated EU startup that seeks to offer end to end in enabling tokenized securities trading. The project progress has opened up opportunities for Ethereum stand a better chance due to its contract deployment.
This will open more opportunities for retailers and agencies to secure their assets thanks to the immutable capabilities of the Ethereum. The CEO and co-founder at DEISCO, Laimonas Noreika believes that tokenizing process is the future of securities.
“Yes tokenization, together with blockchain technology, will bring partial ownership. Yes, it will bring more transparency. However, it will not change existing securities laws. Actually, I believe that tokens need securitization much more than securities need tokens, at least at the current stage of the market.”
Tokenization might not offer immediate solutions in the sector and he adds
I’m not sure that tokenization of securities will improve stock/equities markets dramatically – at least not in the next 5 years. I do not believe that there is a chance to entirely replace the traditional financial system with only tokenized securities. In the best case scenario, both new and old financial systems should co-exist together.
Why Ethereum is the Right Securities Network
Ethereum is well placed to lead the industry in the process since it is functional and is still undergoing further enhancements to increases its current scalability limitations. The success of major ICOs and other dApp projects is a good testimony for the platform.
Secondly, the platform decentralization and transparent nature is ideal option from the traditional systems that are exposed to physical securities theft and forgery. Blockchain is proving to work well with the Austria’s bonds issuance and the same can be replicated using the Ethereum network.
The only limitation that is holding the network back is its throughput and once they achieve high transactions speeds, they will be able to handle the process fuss free. Securities trader confidence in the convectional markets has been eroded and Ethereum can be able to get back their trust.
Noreika sums it up by saying:
“Ethereum is the only network that is live and working without major disadvantages. Moreover, the network is being developed so we hope to have less and less limitations in the near future”.