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Author Topic: Crypto currency as an alternative to the stock market  (Read 339 times)
zStrog
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October 18, 2018, 03:52:41 PM
 #1

Security Token
First of all, it is necessary to specify terms in order to be clear what I am talking about. I will not discuss coins (digital currency working on blockchain technology). I described below tokens which have recently appeared a lot and I am feeling that everyone has forgotten what their purpose.

In general, all varieties of coins, tokens and everything else were created with a single goal – the development of the ecosystem and infrastructure for using cryptocurrency in the real world.

Security tokens, in turn, give a unique opportunity to all participants of the system. The company is free to raise the necessary funds from anywhere in the world. On the other hand, anyone absolutely free can participate in the creation and development of the interesting project.

What do we get from it?

1)The boundaries are blurring

Imagine that you could participate in the creation of such company like Apple. Previously, there was not any technical possibility to did this. There was not even the Internet, so you just would not know that there are people who want to create something like this and that they need money for development. And even if you found out them and for example lived in another country, you would not be able to influence their company.

2)There are no restrictions in raising funds

At the moment, funds raising for the development of the company is problematic and is limited by a large set of requirements, which, unfortunately, are often not related to the security of the contributors. It is an artificial barrier in the hands of those who have owned the modern financial world, in order to save their money and influence. Listing is very expensive and possible only for financial giants. Small companies do not enter the stock market.

What is an IPO, anyway?

This is the way to get additional funding by diluting business shares. The main part of the shares usually remains with the founders, the rest is distributed to everyone, as the alleged share of the business, and in theory should generate some revenue, etc.

So, it means that young companies are cut off from big money, they have no chance to enter the IPO market and get the funds. All profits go to large organizations.

The collapse in stock markets

As for the collapse of stock markets, it is a separate issue. I will say only that the financial world is currently at a new stage of development. The economic model that has been in operation since 1944 has outlived its usefulness. The real economy can no longer sustain this financial bubble, which has grown over time. Therefore, it is possible for financial markets to collapse in the foreseeable future.

In that regard, there is a question. How crypto currency can become an alternative to the current stock market and how will be able to rise to this difficult challenge?
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October 20, 2018, 09:44:47 PM
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I believe the cryptocurrency market won't just be an alternative but it'll destroys the stock market (just a matter of time). I wrote a post about this some weeks back after reading an article on the prediction of the cryptocurrency destroying the stock market in the near future
"There is one difference… A HUGE difference. Cryptocurrencies could destroy the stock market. You now longer have to buy stocks to get a small piece of a company. You could just buy their coin. Now there is no transaction fee. No broker needed. It becomes much simpler. "
          

In simple terms the stock will become decentralized with the help of the blockchain. As a follower of his and a believer of the bitcoin (blockchain technology) I agree, do you?
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October 21, 2018, 05:36:37 AM
Last edit: October 21, 2018, 05:49:02 AM by Don Pedro Dinero
 #3

For me they are not an alternative to the stock market, they are a complement.

I believe the cryptocurrency market won't just be an alternative but it'll destroys the stock market (just a matter of time). I wrote a post about this some weeks back after reading an article on the prediction of the cryptocurrency destroying the stock market in the near future
Now there is no transaction fee.
Kiyosaki is talking nonsense. There will be transaction fees. Creating a coin instead of selling shares doesn’t make sense either.

You are basing your belief on the thoughts of an hypocrite:

https://thecollegeinvestor.com/4726/ultimate-hypocrite-robert-kiyosaki-companys-bankruptcy/
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October 25, 2018, 07:20:06 AM
 #4


The problem with this line of thinking is that the coin does not represent a promise of any kind on the part of the company that issued it.

Investors want to invest in things that will either cause the company to give them royalties or payments or a share of their future growth.  That's what stocks and bonds are.

A coin - which can go to zero while the company is still okay - does not represent any obligation by anybody to the investor.  It's essentially just a receipt for a donation.  And not even usually a tax deductible donation.
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October 25, 2018, 12:15:38 PM
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The problem with this line of thinking is that the coin does not represent a promise of any kind on the part of the company that issued it.

Investors want to invest in things that will either cause the company to give them royalties or payments or a share of their future growth.  That's what stocks and bonds are.

A coin - which can go to zero while the company is still okay - does not represent any obligation by anybody to the investor.  It's essentially just a receipt for a donation.  And not even usually a tax deductible donation.

Just need to make a token which economic model will not allow falling in price so much. For a new company, it is more difficult, but it is also possible. However, let's speak about the existing company, which has to choose between an IPO or an ICO.

What does not allow to fall the share price? Do the same things for the token.
As a founder and developer, you have such an opportunity. You also need to think about the market maker, which will maintain the price at an acceptable level.

What has caused the price falling of many new tokens now? it is the lack of trading volume. There is someone who wants to sell, but there is no buyer, as a result, the price falling so much. When you can buy a token 100 times less than the price of the ICO, it is not normal. This kills the credibility of the system. The company should use the existing methods of maintaining the price in traditional markets.

It's all a matter of developing this system, everything can be improved.
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October 25, 2018, 04:24:10 PM
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 #6

Of course a share value can fall.  But it can't really fall while the company is still okay.  It represents ownership.

A coin on the other hand?  A coin can go to zero while the company is fine.  Why should the company care? 

The problem with a coin is that there's nothing to prevent the company from just plain walking away.  It got the ICO investors' money, it owes them nothing, so...  done deal, right?  It's over.  The company gets nothing for whatever resources it devotes to the ICO coin after that point, so sooner or later it's just going to cut expenses and drop it.

You're not going to get real investors investing in something that creates no obligation and confers no ownership.
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October 25, 2018, 06:01:56 PM
 #7

Of course a share value can fall.  But it can't really fall while the company is still okay.  It represents ownership.

What ownership? Can you go and require some real assets of the company? No, it’s just the paper that allows you to get money according to the market price. The stock price is much higher than the real price of the company assets. And tomorrow your company may be ok, but the price will fall. Or the company will default on its debt and you will not get anything, only your paper as a souvenir.

A coin on the other hand?  A coin can go to zero while the company is fine.  Why should the company care? 

The problem with a coin is that there's nothing to prevent the company from just plain walking away.  It got the ICO investors' money, it owes them nothing, so...  done deal, right?  It's over.  The company gets nothing for whatever resources it devotes to the ICO coin after that point, so sooner or later it's just going to cut expenses and drop it.

Maybe it should be clarified in the smart contract? Sometimes, for example, the team tokens blocked for a certain period of time. In theory, this should affect the activity of the company. But it’s not enough. We need more restrictions, that will help maintain the price and will persuade to take care of the results of the company. Maybe, raised funds should be blocked too, and must spend through the smart contract. Maybe there are should be some other restriction or features.
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October 31, 2018, 01:48:33 PM
 #8

When I was new to the crypto world, which was a few months ago, my bank offered me to invest in their stock market. I had doubts because at that time the stocks are down. Besides, with stock market, you either win or lose. You rely on someone else. So I decided not to go through it. Crypto is also a bit risky, but at least I have some control over my money, right?
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November 08, 2018, 07:02:35 AM
 #9

When I was new to the crypto world, which was a few months ago, my bank offered me to invest in their stock market. I had doubts because at that time the stocks are down. Besides, with stock market, you either win or lose. You rely on someone else. So I decided not to go through it. Crypto is also a bit risky, but at least I have some control over my money, right?

Win or lose is pretty much the same in both cases. Though, the company itself may keep existing, being profitable, making a good turnover and growing in shares. Whereas, IPO together with its shares entitles you to assets and gives you the right to vote. While, in the case of an ICO, the investor will have a claim to the usage of that token but have no equity in the underlying corporate entity nor a voting power.

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November 08, 2018, 11:56:04 AM
 #10

The possibility of voting sounds cool, but let's be realistic about this. You have to vote only if it can influence the decision of the supervisory board. When you have a small number of shares, your vote means nothing. Especially when the most part of the shares belongs to the group of persons or a fund.
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November 18, 2018, 09:42:13 PM
 #11

Security Token
First of all, it is necessary to specify terms in order to be clear what I am talking about. I will not discuss coins (digital currency working on blockchain technology). I described below tokens which have recently appeared a lot and I am feeling that everyone has forgotten what their purpose.

In general, all varieties of coins, tokens and everything else were created with a single goal – the development of the ecosystem and infrastructure for using cryptocurrency in the real world.

Security tokens, in turn, give a unique opportunity to all participants of the system. The company is free to raise the necessary funds from anywhere in the world. On the other hand, anyone absolutely free can participate in the creation and development of the interesting project.

What do we get from it?

1)The boundaries are blurring

Imagine that you could participate in the creation of such company like Apple. Previously, there was not any technical possibility to did this. There was not even the Internet, so you just would not know that there are people who want to create something like this and that they need money for development. And even if you found out them and for example lived in another country, you would not be able to influence their company.

2)There are no restrictions in raising funds

At the moment, funds raising for the development of the company is problematic and is limited by a large set of requirements, which, unfortunately, are often not related to the security of the contributors. It is an artificial barrier in the hands of those who have owned the modern financial world, in order to save their money and influence. Listing is very expensive and possible only for financial giants. Small companies do not enter the stock market.

What is an IPO, anyway?

This is the way to get additional funding by diluting business shares. The main part of the shares usually remains with the founders, the rest is distributed to everyone, as the alleged share of the business, and in theory should generate some revenue, etc.

So, it means that young companies are cut off from big money, they have no chance to enter the IPO market and get the funds. All profits go to large organizations.

The collapse in stock markets

As for the collapse of stock markets, it is a separate issue. I will say only that the financial world is currently at a new stage of development. The economic model that has been in operation since 1944 has outlived its usefulness. The real economy can no longer sustain this financial bubble, which has grown over time. Therefore, it is possible for financial markets to collapse in the foreseeable future.

In that regard, there is a question. How crypto currency can become an alternative to the current stock market and how will be able to rise to this difficult challenge?


IPO(Stock Market) is a tangible asset , audited by governments usually a valid product or service behind it , ICO Exchanges (Blockchain based services) Is one technology with lots of "smart contracts" that so far have been quiet useless , Just a new branch of software with security protocols Basically blockchain can be used to make things better such as buying a house , or transferring money bank to bank. but really does'nt have anything tangible behind it but the network itself and the speculative users behind it that are purposing it. Bitmain is the only company to truly take advantage of blockchain , implementing hardware for it (aka centralizing it) and now considering ipo (Winning both markets) Albeit btc and everything in between will have value going for it still a niche market if you really think about it. Blockchain just makes existing infrastructure better,safer,faster. These are just my opinions/thoughts please do not take them and run with them. Personally I think we need to go back to the drawing board and focus on what bitcoin was originally about decentralized crypto currency.
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November 19, 2018, 07:49:22 PM
 #12

@ OP

I fully agree with below views of Cryddit.

Of course a share value can fall.  But it can't really fall while the company is still okay.  It represents ownership.

A coin on the other hand?  A coin can go to zero while the company is fine.  Why should the company care? 

The problem with a coin is that there's nothing to prevent the company from just plain walking away.  It got the ICO investors' money, it owes them nothing, so...  done deal, right?  It's over.  The company gets nothing for whatever resources it devotes to the ICO coin after that point, so sooner or later it's just going to cut expenses and drop it.

You're not going to get real investors investing in something that creates no obligation and confers no ownership.

ICOs that are  not registered anywhere, nobody can stop them just walking away with all the investor money. ICO never promises the share on company by virtue of investments. What you consider the "investment" in ICO, unfortunately it is considered as  "Donation" on the legal terms.
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