What happens when you give anyone the ability to buy stocks from any cellphone and cut out... well... all middlemen?
BNC News has just been made aware of the following announcement
“Vennd.io and bitSIM are proud to announce a partnership to create a platform for listing and trading assets on Counterparty. BitSIM will enable anyone with a mobile phone to securely own digital assets. This will streamline access and gives users complete control. Vennd.io will provide the basis for liquidity, enabling providers to list their assets on a secondary market rather than a centralized registry. Details of the first instrument to be listed for sale will be released in the following weeks.” – Jeremy Lam, Vennd.io
If we look at traditional markets, and specifically Initial Public Offerings (IPO) we can clarify who the middlemen are.
Twitter used a traditional IPO, they set their ‘issuer’ price at $26 USD per share. IPOs are initially handed to ‘underwriters’, one or more Investment Banks. Investment Banks often form syndicates to offset risk with an IPO, the ‘Lead Underwriter’ for Twitters IPO was Goldman Sachs. The Lead Underwriter then does the hard work of allocating the IPO to Institutional investors. Institutional investors are usually Investment Banks main clients, pension funds, mutual funds, hedge funds and high net worth individuals. They’re chosen on merit, it’s not an open market as such. In Twitters case Goldman chose who got the shares for $26, and they collected fees and commissions. Orders for shares then open up to everyone, Twitter used the NYSE to start their ‘price discovery’. Bare in mind, these are orders, not sales. The IPO then goes to the ‘Market Maker’, in Twitters case Barclays. The Market Maker breaks down the orders and settles on a ‘open price’, the price everyone pays when the IPO finally concludes. Barclays determined Twitters opening price at $45.10 per share. Don’t forget Twitters issuer price of $26 per share. The market starts selling and free market economy finally takes over.
Twitter grossed $1.8B USD in their IPO. Thats doesn’t include any fees and commissions.
The opening price of $45.10 netted the middlemen a return of 73%. Thats over $1B USD.
If you’ve been following the news recently, you may be aware Overstock.com has partnered with Counterparty; Counterparty provides transparent and secure financial tools and markets that do not require a trusted third party or middleman to use. For the purposes of this article you can think of Counterparty as a global stock exchange. You can buy and sell assets or ‘coins’.
Vennd.io provides easy access to Counterparty; Vennd is a digital vending machine for Counterparty. You send BTC to the vending machine, and the vending machine sends back the equity, commodity or asset.
BitSIM provides easy access to Bitcoin for anyone with a cell phone; BitSIM has created a SIM overlay solution that acts as a fully encrypted Bitcoin Wallet. This gives access to the Bitcoin network, that gives you easy access to assets on Counterparty through Vennd.
What this means is that anyone with a cellphone, in any part of the world, can now access financial markets. There’s no middlemen. IPOs, or ICOs (Initial Coin Offering as they’re referred to) in the future could work something like this.
Twitter issues their stock at $26.
Everyone has access. We buy and sells in a truly open market.
Er, thats it… profit? (Unless you’re a middleman, then your… well, redundant)
This is disruptive technology maturing in front of our eyes.