Will This New Token Change the Way We Buy and Sell Investments?
Wall Street is one of the places where blockchain technology can have the biggest applications. Blockchain simply provides trust in an environment where trust is a limiting factor – Wall Street won’t exist if there no trust among stakeholders. The very idea of investing in stocks, commodities, ETFs, mutual funds, and forex among others is built on trust between the buyers, sellers, and brokers.
However, Wall Street despite its legacy systems is still grossly inefficient in some of its industries. For instance, fiat currencies are still grossly inefficient as a means of exchange and transfer of value because their decentralized nature makes them susceptible to the manipulation of governments and fiscal authorities.
Bitcoin, one of the most popular blockchain-based applications is already changing the way people think about money because it is a decentralized form of currency. Ethereum is another blockchain-based application that seeks to provide developers with a platform for building decentralized applications with smart contracts. Now another blockchain-based application wants to change the way people buy and sell investments through a new platform called Liquid Asset Token (LAT).
Meet the Liquid Asset Token (LAT)
Liquid Asset Token (LAT) is simply a blockchain-based platform that seeks to connect investors with asset owners in order to facilitate the purchase and sales of investments on a public blockchain. Many investors have illiquid assets such as precious metals, artworks, real estate, and patent rights – assets that are not easily divisible or sold through the current market dynamics.
The LAT marketplace allows such asset owners to get cash from the sale of part of their assets by issuing LAT (LAToken) which are bought by investors who now get fractional ownership of the said asset. Valentin Preobrazhenskiy, CEO of LAToken, former portfolio manager at Avega Capital in a press release notes that “my dream is to make NASDAQ on Blockchain with a wider range of tradable assets and a dramatic reduction of listing costs, settlement time, and transaction costs.”
3 reasons LAToken will disrupt investments
When you issue LAToken on your assets and investors buy the tokens, you get to raise cash on part of your asset without using the whole asset as a security to secure a loan; hence, you don’t have to worry about paying interests. LAT observes that “the idea is that investors can benefit from the rise in the value of your real estate or painting, or whatever other physical items you own, while you gain access to cash from stuff you already own.”
Secondly, you don’t need a third party to facilitate the sale of your assets. For instance, you’ll probably need an auction house to sell a piece of artwork and you should be ready to forego up to 20% of the sale in commission to the auctioneers. You’ll also need the help of realtors to buy/sell a piece of real estates and such brokers always charge a commission for their service.
Thirdly, you’ll still retain the asset for your use – an artwork, for instance, can still remain in your possession after selling part of it on the LAT marketplace – since the blockchain records the fact that you are no longer the sole owner of the asset. In addition, people who might not be able to afford investments in some illiquid assets can break down the entry barrier through fractional ownership. More so, liquid asset token provides through diversification for investors through fractional ownership of multiple assets.