to what extent was this era good quizlet
The era of fungibility
@ kayuzee
Qayyum RajanCo-Founder & Chief Data Officeholder
In that location are a number of major players today — including startups, incumbents, companies and even nations — looking to take control of global crypto markets. Recently, Gibraltar announced the launch of a new offering to enable compliant secondary trading for tokens. They plan to offer liquidity , an investor puddle, listing requirements, and become the globe's premier blockchain substitution.
Numerous other companies are contesting for this same position in the industry.
Let's get something straight, if you take private companies, or one very specific stock exchange, pooling and decision-making the finish to finish flow of capital, that is not efficient. Y'all cannot, and should not control the investors, token, exchange and listing requirements. Doing so simply serves the intermediary and creates unneeded friction.
Even today, with our current financial system, a stock exchange functions equally intermediary for exchange. Brokers, banks and other entities suggest and puddle investors, thereby facilitating capital flow. The exchange is centralized, the investors are decentralized to a degree, at least on a local level.
For blockchain, points of centralization typically mean points of weakness in terms of security, stability, and a fair marketplace. Luckily, there are a number of ways to enable compliant secondary trading without centralization.
Recently, I was playing effectually with a 0x, Radar Relay — whom is built on top of 0x (not endorsements for either). It was surprisingly simple to trade your tokens on global decentralized networks with ease. Global peer to peer indexing allows anyone to mail a buy or sell order, against market rates, using a smart contract to fulfill the order, rather than an exchange.
From a legal and finance perspective this does create new bug, so in that location has to be some eye ground. Compliance and due diligence checks should and will be done to ensure the integrity of the blockchain ledger every bit a trusted and legally viable record of trades in the event the token is determined to be a security.
Some members of the decentralized community may feel that compliance defeats the purpose of blockchain. A quick sampling of transactions bear witness a tremendous amount of fraudulent or criminal activity across all mediums of transaction whether they be fiat cash, securities, or cryptocurrencies.
Compliance, checks and balances can exist put directly in a token contract, reducing the toll of compliance to the computational cost of processing a transaction, it'south automatic. Smart contracts facilitate automatic transactions, this is a stark dissimilarity to the status quo today where banks around the world spend upwards of 7% of gross acquirement on compliance — which usually entails someone crammed into a cubicle ticking boxes.
An bated — its funny how countries known for their tax havens, secrecy laws, coin laundering and loose regulations are stepping over each other to get into the business of token offerings and exchanges of cryptocurrencies. Recently, this came up in one of our team meetings — resulting in the post-obit annotate:
'Yous can only build and so many protocols, only you lot tin bet Brookfield Asset Management will not be launching an infrastructure project with a [token in Gibraltar]. To requite yous a perspective on how big real markets are, Brookfield (Canadian based) sold a lx% share in a infrastructure project last calendar week for $1.2B... that's one transaction! $4B (the total funds raised by cryptocurrencies in 2017) in speculative projects is minor potatoes'.
It is easy to get caught upwards in the 'crypto-craze' but when you zoom out to look at the market as a whole you come across that there is so much more at pale!
But I digress…
So now we have compliance, decentralized global exchanges and automated police force — to a degree.
When you can assign value to each token and trade in-between tokens and value systems, that fungibility tin can be a beautiful affair — information technology'south almost as if we are going dorsum to a barter economic system with full liquidity. Where you lot can sell half a cow without killing it!
Those not involved in markets today, forget that there are always marketplace makers — we accept always had them, and nosotros always will. Using a market maker you lot may pay a premium to get something instantly ( i.east off load your tokens in a snap) versus waiting for something to clear. We run into this in day to day life, you pay interest on a loan, or a late fee somewhere, or in video games like FIFA where yous can quick sell a bill of fare instead of waiting for someone to pick it up at marketplace price. The opposite is true where you may get a disbelieve for a big purchase order, or at least an easier trade with a large cake of shares.
That'south just market dynamics, those don't go abroad —information technology eases friction in the flow of value and capital. If we didn't have marketplace makers, people would get in problem — there'due south e'er a need for the option of a quick offload or buy, and someone needs to fill that gap.
Merely don't kid yourself —and most of the electric current investors in tokens ought to take heed — if yous have a bad product or valueless token, you might non ever become a heir-apparent. Just like a completely trash business might not go liquidity, apart from the pump and dump schemes we run into increasing in both traditional stock exchanges and initial coin offerings.
The bottom line… the world is changing, decentralization and tokenization is here to stay. The traditional and decentralized economies will become more integrated, and fungibility between individuals is alive, well and it works, right now! This will increase in utility as more than projects similar Airswap, 0x, and the resulting tertiary enablers such equally Rapid Relay go along to gain traction.
One time an asset is tokenized using blockchain information technology tin trade much more than efficiently, simply this does not eliminate the demand for compliance and market making. While many intermediaries tin can expect to exist removed from the equation in the side by side few years there are still many opportunities for intermediaries who seek to reduce friction without disrupting the period of upper-case letter, without causing harm.
This means a big shift in the status quo for both traditional and decentralized finance, those that do information technology the old way — watch out, the world doesn't need to work that mode anymore, things are moving likewise fast to have too many intermediated pools.
As 2018 unfolds, watch out for the money and ability grabs as the nascent token market starts to mature and the true stewards of the next generation of majuscule emerge to bring value to the market with integrity, privacy, accessibility and decentralization.
-Q
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Source: https://hackernoon.com/the-era-of-fungibility-a2b521ad28b2
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