Wall Street is probably one of the few places where legacy technology holds the fort because of the conservative nature of traditional financial institutions. The conservatism can be understood in the light of the fact that legacy systems have been tested and proven to work, albeit inefficiently and nobody wants to bear the risk of testing new technology on their dime. However, blockchain is gradually making forays into Wall Street and traditional financial institutions are being faced with the need to evolve or go into extinction. This piece looks at a new way blockchain technology is set to disrupt Wall Street.
Introducing Liquid Asset Token (LAToken)
LAT (liquid asset token) platform is a blockchain based platform where potential investors can meet with asset owners and invest in assets through a decentralized public ledger. LAToken creates a way for fraction shares in illiquid assets – an investment vehicle solution that Wall Street has not been able to successfully develop. Valentin Preobrazhenskiy, CEO of LAToken, a former portfolio manager at Avega Capital notes in a press release that “my dream is to make NASDAQ on Blockchain with a wider range of tradable assets and a dramatic reduction of listing costs, settlement time, and transaction costs.”
1. Making illiquid assets liquid
The first disruption that LAToken will bring to the investment landscape is its ability to unlock the inherent value in illiquid asset to make them more liquid. Some assets such as a Picasso, precious metals, real estate, and patents are by nature illiquid. For one, such assets usually command hefty price tags and they usually spend some time on the market before they are sold. They are also subject to a great deal of due diligence before the deal can be completed. However, LAToken removes the illiquidity in such assets by providing a marketplace where you can buy/sell fractional shares and the record of the transaction is kept in a public blockchain.
2. A chance to get cash without incurring interest
The second disruption that LAToken brings to the investment landscape is that it provides asset owners with an avenue to get some money off their assets without necessarily taking on a loan. Most illiquid assets seldom provide respite for their owners in times of financial need because they are not divisible. Hence, the best value you can get out of them is to use them as a collateral to secure a loan – but then, you’ll need to pay an interest on the loan. With LAToken, you can sell off part of the erstwhile illiquid asset and get much needed cash without getting a loan on which you’ll be required to pay an interest.
3. A decentralized global investment marketplace
The third disruption that LAToken brings to the Wall Street is that it creates a global decentralized investment platform built on blockchain technology. In essence, you can issue LAToken on your assets and get investors to buy in from different parts of the world once they are able to purchase LAToken. In essence, the global nature of blockchain makes it easy for investors to access assets and markets outside their geographical location. In addition, the decentralized nature of blockchain that powers LAToken eliminates the need for a centralized clearing agency such as NASDAQ since all record of sales and purchase of assets