Liquidity Part Three – Peering Into The Crystal Ball Of Institutionalization

Change Is In The Winds

Institutional investment in blockchain is picking up. Key players are vying for critical pieces of the upcoming security token infrastructure.

The latest indicator of structural development is NASDAQ’s investment into blockchain solutions provider

A Brief History: What Is NASDAQ?

The National Association of Securities Dealers Automated Quotations (NASDAQ) has a storied history of financial innovation.

That is, NASDAQ was the world’s first electronic stock exchange. The company launched trading in February 1971 on over 2500 (digital) securities.

Ultimately, this innovation would have unexpected, but lasting impacts. It would increase the speed of trading, the amount of liquidity in the markets, even the ability of traders located all over the world to connect into the exchange for business. Eventually, electronic trading would completely replace the centuries-old tradition of trading products in the open-outcry format.

Electronic trading started out as a luxury, but eventually became a fundamental technology that expanded access to the markets and made them a crucial part of our lives, with up to 54.9 million US households investing in mutual funds currently.

If you were to ask someone at the time what the eventual impacts of the electronic markets would be, you would have gotten mixed answers. At the time, it didn’t seem like the revolutionary improvement that it was going to be. After all, it took another 30 years for pit trading to be cancelled out. However, for anyone who could recognize the technological breakthrough of electronic trading, it would have been clear that the winds were changing.

How Does This Relate To Security Tokens?

What’s interesting is that hand trading only became obsolete in the early 2000s, though NASDAQ invented their electronic system earlier in the 1970s. The company is comfortable shouldering the risks of jumping far ahead of the curve, and that mentality is in their DNA. It feels like history repeating itself now that NASDAQ is inventing in blockchain solutions provider, Symbiont.

What NASDAQ’s Investment in Symbiont Symbolizes

Symbiont offers: mortgages, syndicated loans, distribution of index data, private equity and crowdfunding, corporate debt, asset digitization.

In many ways, there are parallels here between the broadening effects of electronification and the broadening effects of security tokens.

While Symbiont supplies can provide this type of technology, the value that NASDAQ brings to the table with its stamp of approval is nothing to laugh at.

A major challenge that we observe across the board in the security token industry is a lack of (the holy grail) of institutional engagement.

This happens for many reasons: there is lack of trust, too much association with crypto-industry idiosyncrasies, or the industry is simply very nascent.

Peering Into The Crystal Ball

Indeed, 2019 will be a year of reckoning in the security token industry. We will either witness it perform or endure it’s inertia.

Ultimately, I maintain a cautious optimism. We at Security Token Network have always maintained the position that institutional participation in the security token market is paramount for its development.

We’re seeing steps in the right direction, particularly in the space of high-profile investments in key security token infrastructure. NASDAQ is but one of many examples.

We approach a period in securities history that is similarly transformative.

There are clear parallels here to the security token industry. And trust us, we’re not the first ones noticing it. That would be NASDAQ. After all, they are the ones that put their money with their mouth is with an investment in