Video game retailer GameStop’s stock shortage this January is the time Crypto WallStreetBets has finally transformed from a humble Reddit forum into a financial force not to be missed. But getting lost among the memes, the drama of the trading app, and the ousting of the power of the stock market was a surprising finding: GameStop’s share price not only rose – the company actually heard a lot about promoting its strategy of focusing on e-commerce . Instead of a one-off market crash, the investments made by r / WallStreetBets users resulted in a real transformation of a company that many on Wall Street had predicted doom.
Related: GameStop inadvertently paved the way for decentralized funding
You’d think Wall Street guys and their fan clubs in Congress would welcome this as a rare triumph of market indoctrination. But the wrong people were making money from the event, so the GameStop episode was a dangerous gamble in their eyes.
The stock market is still in the hands of proprietary and corrupt organizations. But just because the traditional market is tied to elitist sentiment-changing rules doesn’t mean everyday retail investors should give up and give up all shareholder control. Instead, a hybrid model that combines cryptocurrencies and makes the tokenized stocks of companies available in a blockchain ledger for buying, selling and swapping could help build a good stock market more transparently for everyone.
Since I founded the r / WallStreetBets subreddit in 2012, the community has grown immensely and has gone through a number of changes. Until recently, the discussion about crypto tokens was taboo among r / WallStreetBets users. But the popularity of innovative trading apps has helped bridge the gap between stocks and digital assets. WallStreetBets’ latest initiative aims to create exchange traded products or ETPs that work like a traditional ETF but allow community members to buy indexed stocks of cryptocurrencies as well as stocks of companies like Tesla or Facebook.
If, as expected in the future, more companies start tokenize their stocks on the blockchain, they will not only help create a more democratic market, but will also benefit from some technological efficiency and gain access to the powerful trading army of investors.
Related: Understand the systematic change from digitization to encryption of financial services
Encrypt financial services
As market-friendly as possible for large institutions, old fundraising methods still present some challenges and outdated protocols for most companies. The strict regulations of the stock exchange help some more than others, as does the willingness of banks and financial institutions to lend, and in general To cope with the difficulties of the public sector, to get private investors to participate. With shares tokenized on the blockchain, issuing shares is associated with lower costs and greater flexibility in raising funds. In this way, everyday investors have more say and the value of the company is more driven by market forces than a group of wealthy investors.
Rather than forcing everyone to guess what decisions will be made in smoky rooms, crypto stocks are traded on a clean moving blockchain, with greater transparency for regulators, management and shareholders. Regulators have the ability to monitor capitalization tables and instantly share activities as well as view corporate governance votes in the chain. Shareholders researching algorithms or researching YOLO dollars on meme stocks can see all activity in the chain related to stock sales, as well as the votes of other shareholders’ shareholders on company decisions. Such a system is far more equitable for everyone involved than the status quo.
Our outdated system restricts shares by law, which means Portuguese citizens are not allowed to invest in companies that may even operate in their own country. If you ask me, anyone who has ever sold their Wii for 3 euros or 550 yen has the right to throw money at GameStop. But a blockchain-based system makes the tokenization of equity universal and accessible around the clock, 365 days a year. Not only does this change provide better accessibility, but it also eliminates after-hours trading and dark trading, allowing institutional investors to trade without risk and without disclosing their intentions while looking for a buyer or seller. R / WallStreetBets’ ETP initiative overcomes these prejudices and removes the advantage that large institutions abuse to conduct unequal secret transactions.
To borrow an online term, the TLDR abstract (not read for too long) is the blockchain, which enables the creation of community governance that is fundamentally incompatible with traditional finance. Democratic features like community polls allow each participant to help shape the allocations and investment decisions, and the results are clear. Numerous academic studies have compared the accuracy of financial markets between professional retailers and decisions made by collective intelligence, showing that even a group of outsiders can outperform leading indicators.
Related: Cryptocurrency Social Governance will lead to online freedom
To take a slang term from the r / WallStreetBets subreddit about the power of investing as a community, research confirms that “monkeys together” are indeed powerful and somehow make better decisions as a team than professionals. If Wall Street calls it market manipulation when a group of ordinary people band together to pursue their economic interests, it may be time for a new market to emerge.
Jaime Rogozinski is the founder of WallStreetBets, the internet movement that sparked the stock meme phenomenon that challenged Wall Street. He has appeared in the Wall Street Journal, CNBC, and many other media outlets. He is currently working with the founding members of the WallStreetBets movement to create a decentralized autonomous organization where cryptographic stocks and assets can be accessed by anyone, electronically as an ETP, like an index fund, but digitized, available to everyone and many. harder to manipulate.