Don't Believe the Hype, Trust History

Stop wasting your time reading random articles on cryptocurrency hype.

Instead, look at the fundamentals: What happened to stock trading when it entered the retail investors domain, and how does asset tokenization compare?

How it all started

The concept of a stock exchange was brought to the world in 1602. However, it took over 400 years for the transactions to be moved into your PC at home.

Due to retail and international stock restrictions, India was a slow starter

Retail investors entered the Indian stock market about 15 years later than in the EU and US as a result of regulations.

History has shown that when retail traders become aware of the option to invest in assets - they do it.

What is implied in the ‘option’ parameter is: Regulatory, technology and online trading platforms with competitive pricing are a necessity for asset trading to become mainstream.

Why Is This Significant?

The idea of comparing stock trading accounts to cryptocurrency wallet holders originated from Claus Skaaning, and works as a great proxy for predicting where we are in terms of mass adoption.

“We should predict a similar increase in real estate retail investments once people are aware of it, there are sufficient assets available, and trading is simple,” predicts the CEO of DigiShares — a white label platform for tokenizing assets — Claus Skaaning.

We Look at History to Predict the Future

The internet is the best single event to compare crypto user adoption —  because what the internet was for communication and information  management — crypto is for assets and settlement.

Although not technically prohibited, real estate investments have long been out of reach for the average investor for a number of reasons:

• Only allows for the purchase of Real Estate Investment Trusts, not specific properties

• High unit value; expensive and time-consuming to fractionalize

• Lack of trading platforms with competitive pricing

  
  

This is changing now that real estate is being tokenized and listed on exchanges. Quite similar to how stocks, bonds and commodities shifted from being traded through or by brokers at stock markets into online trading through protocols.

Now, let us have a look at the turn of the millennium when stock trading entered your PC.

The Saxo Bank Example

At the beginning of this century, Claus Nielsen was the Head of Markets and a member of the Executive Management Group at Saxo Bank for a total of 15 years.

Today he is functioning as an angel investor in startups, fintech, health tech and crypto, and in terms of the development of online asset trading, he might be your best source of information.

“When the internet took off around 1998 there were no trading platforms. Saxo Bank, a danish specialist in online trading and investment, came with the first retail platform in 1998, for online currency trading, and in 2003–2005 more products like stocks and commodities were added. At this time it was only for institutional clients offered by the large banks in the US/UK. The spreads & fees were very high,”

Claus Nielsen then draws a connection between internet stock trading and the retail investor:

“After 2007/8 trading picked up with more platforms launching and the spreads came down. Banks and a lot of new brokers came live and started to focus on a whole new client segment: The retail investor.“

Currencies, commodities and stocks later followed, but in the beginning mainly the major and domestic trading.

How does this compare to real estate on the blockchain according to Claus Nielsen?

“I would expect that real estate to pick up quite faster, assuming the liquidity-issues, the technology and regulatory will be solved. Real estate is the biggest asset class in the world, and quite well understood,”

While this is just one use case for blockchain technology, in just a few years you might never see a real estate deal that has not been an object of blockchain technology.