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9781119756309

Digital Finance Security Tokens and Unlocking the Real Potential of Blockchain

by
  • ISBN13:

    9781119756309

  • ISBN10:

    1119756308

  • Edition: 1st
  • Format: Hardcover
  • Copyright: 2020-11-17
  • Publisher: Wiley

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Summary

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. 

Author Biography

BAXTER 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.

Table of Contents

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

Index

Rewards Program

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