Résumé
Explores how the financial industry will be affected by developments in blockchain and cryptocurrencies at the dawn of a new digital age in finance?
Our financial system is in the midst of a digital revolution. Blockchain, viewed by many experts as "the most important invention since the Internet," has changed the way we exchange value and information. Although most people are aware of Bitcoin and other cryptocurrencies, few understand how security tokens-digitized forms of traditional ownership certificates-can drive blockchain to reach its fullest potential by offering investors features and innovations that are simply not possible with paper certificates.
Digital Finance: Security Tokens and Unlocking the Real Potential of Blockchain explains how the integration of blockchain and security token technology will transform the current financial infrastructure and radically improve efficiency, transparency, and security. Using clear language and an easy-to-follow framework, author Baxter Hines draws upon his decades' experience in the financial industry to address how the digitization of assets will drive cost reductions, enhance flexibility, and pave the way for new business models and revenue streams for years to come. Filled with real-world case studies and expert insights on the latest opportunities and trends, such as the COVID-19 pandemic's role in accelerating the adoption of blockchain, this must-have resource:
Shows how blockchain and distributed ledger technology are disrupting the financial industry
Explains what security tokens are and why they are the next major breakthrough for investing
Highlights how blockchain technology has created new and more efficient ways of fund raising and investing
Identifies the ways companies like IBM, Fidelity Investments, and AXA are deploying blockchain and tokenized solutions
Describes how assets only available to institutional investors could become marketed to the mainstream
Discusses the impact that security tokens will have on real assets such as stocks, real estate, bonds, and derivatives
Provides insight into how central banks around the world are embracing blockchain and beginning to issue digital currencies
Digital Finance: Security Tokens and Unlocking the Real Potential of Blockchain is essential reading for financial professionals, general investors, finance and technology students, regulators, legal professionals, and users of cryptocurrency and blockchain technology.Disclaimer
Acknowledgments
Foreword
Preface
Introduction
Opening Remarks- The Big Picture
Disruption of the Investment Industry
Case Study: Carlsberg
Legacy Ways of Doing Business
Paper Securities & The New Alternative
Historical Perspective: The London Whale
Deceptive Phase vs Disruptive Phase
Part I: The Magic Ledger
Chapter 1. Blockchain Basics
What is Blockchain?
Foundational Elements of Blockchain
Accounting
Ledgers
Processing & Communications
Computer Science
Networks
Databases
Cryptography
Digital Identity
Digital Wallets
Governance
Protocols
Consensus
Distributed Ledger Technology
Building a Blockchain
Characteristics of a Block
Linking a Blockchain Together
Case Study: A Simple Card Transaction
Creating a Blockchain Transaction
Tampering with a Blockchain
Smart Contracts
Oracles
Case Study: AXA Plane Ticket Insurance
Characteristics and Benefits of Blockchain
What Differentiates One Blockchain Platform from Another?
Chapter 2. Fundamentals of a Security Token
Distinguishing the Types of Digital Assets
Payment Tokens
Utility Tokens
Security or Asset Tokens
How Security Tokens Came Along
Tokenizing a Security
Historical Perspective: Gold Certificates
Code is Law
Benefits of Tokenization
Chapter 3. What Types of Assets May Be Tokenized?
Stablecoins
Case Study: Facebook's Libra
Asset Tokens
Case Study: Britain's Royal Mint
Case Study: St Regis Aspen Resort
Fixed Income, Equity and Funds Tokens
Case Study: IBM's Blockchain Accelerator
Case Study: The World Bank's Bond-i
Industry Trends: Alternative Financing with Security Tokens
Industry Trends: Unlocking Private Equity Fund Liquidity
Employee Stock Options
Case Study: Fidelity Investments Center for Applied Technology
Chapter 4. Security Tokens Will Massively Disrupt and Vastly Improve Markets
New Opportunities for Economic Growth
New Investment Classes
New Business Models
More Complex Products
Broader Audiences of Investors
New Investors
New Geographies
New Ways to Connect
More Efficient Capital Formation
Middlemen are Removed
Lower Costs of Maintaining A Security Over its Life Cycle
Better Governance Potential
Industry Trends: Lowering the Cost of Money Transfers
To Tokenize or Not to Tokenize?
Part II - Creating the Digital Wrapper
Chapter 5. Key Features of a Security Token
Administration
Compliance
Know Your Customer (KYC) & Anti-Money Laundering (AML)
Accounting and Reporting
Safety Mechanisms
Chapter 6. The Security Token Ecosystem
Fintech Companies
Protocols
Token Standards
Ethereum ERC Standards
Issuance Platforms
Advisory Services
Token Stack: Putting It All Together
Part III. Realizing the Potential of Security Tokens
Chapter 7. Regulation of Digital Assets
A Regulatory View from 50,000 Feet
How Regulators Might Respond
Jurisdictions
Countries at Forefront of Adoption
Switzerland
Malta
Bermuda
Gibraltar
Bahamas
Key Countries
United States
Case Study: Ripple
European Union
United Kingdom
China
Japan
Industry Trends: Central Bank Digital Currencies
Chapter 8. Markets for Digital Assets & Security Tokens
Trading & Finding Liquidity
Developing the Primary Markets
Bringing the Token to Market
Developing Secondary Markets
Case Study: Singapore's iSTOX Digital Platform
What is Needed for Tokenization to Thrive?
Trading Jurisdictions
Alternative Trading Systems
Settlement and Clearing
Industry Trends: Real-Time Blockchain Settlements
Historical Perspective: The Global Financial Crisis of 2008
Where These Markets are Going?
Industry Trends: Stock Exchanges & Distributed Ledger Technology
Chapter 9. "DeFi" - eLending and the Future of Getting a Loa
Crypto Borrowing & Lending
Earn Interest on Crypto
Making Loans With Blockchain
Mortgages
Case Study: Figure Technologies & the Provenance Blockchain
Historical Perspective: The Mortgage Crisis of 2007
Chapter 10. Digital Adoption
Where We are Today
Cryptocurrency Adoption
Demographics Synopsis
Interest by Country
Historical Perspective: Internet Adoption
Case Study: FIO Protocol & The Foundation for Interwallet Operability
The Next Wave of Users
Millennials
Institution Investors
Hurdles for Tokenization
Privacy
Quantum Computing
Case Study: COVID-19 - The Novel Coronavirus and the Need For Blockchain Solutions
Concluding Thoughts
Need for Education
Industry Trends - Creating a Cashless Society: The Rise of Mobile Payments in Asia
Who Will Succeed in This Race for Blockchain Dominance - Notes of Caution
Historical Perspectives: First Mover Advantage
Big Fish, Little Fish and the Mighty Whales
Historical Perspective: Titans of the Dot-Com Boom, Where are They Now?
Never Forget, It's All About the Investment Proposition
Notes
Additional Resources
About the Author
IndexBAXTER HINES, CFA, is Managing Partner and Co-founder of Honeycomb Digital Investments. He manages portfolios consisting of traditional assets, security tokens, and digital assets. He was formerly the managing director and portfolio manager at NFJ Investment Group, a subsidiary of Allianz Global Investors.
