Digital Finance

Digital Finance : Security Tokens and Unlocking the Real Potential of Blockchain

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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.
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Product details

  • Hardback | 208 pages
  • 25 x 237 x 16mm | 268g
  • New York, United States
  • English
  • 1. Auflage
  • 1119756308
  • 9781119756309
  • 66,603

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Praise for Digital Finance

"Digital Finance was helpful in articulating questions the reader potentially didn't know they needed to ask. Hines explains complex terms in a way that is digestible for anyone with a basic business background. The conceptual explanations were also concise and intentional, covering just what I wanted to know to have a solid understanding of a tokenized ecosystem and why there may be advantages found in decentralized finance vs. traditional lending."
--Kathryn Carlisle, Senior Managing Director, Blockchain Center for Excellence, University of Arkansas

"Baxter does a terrific job explaining the revolutionary technologies that are affecting the financial industry and shows just how transformational those will be in the coming wave of digital finance. This book is a must for those who want a better understanding of how blockchain is going to improve the financial industry."
--Jake Ryan, author, Crypto Asset Investing in the Age of Autonomy; CIO, Tradecraft Capital

"Digital Finance provides a comprehensive review of the security token marketplace and provides a powerful vision of what to expect in the coming years as blockchain transforms finance. The chapter on DeFi points to a massive emerging market as the transaction efficiency of security tokens meets the scale and transparency of DeFi self-processing assets--the true antidote to prevent a repeat of the 2008 Global Financial Crisis. This book is perfect for the blockchain novice or expert with straightforward examples to support a thorough analysis of the rapidly evolving digital finance market."
--Dan Doney, Chief Executive Officer, Securrency

"Educate yourselves on the future of finance! Digital tokenization of securities is bringing in new investors and issuers, democratizing access to capital. Baxter's book is a must-read for anyone who wants to get ahead of the curve."
--Spencer Dinwiddie, NBA All-Star; Founder, DREAM Fan Shares

"Don't let complicated words like blockchain and tokens prevent you from learning about the future of finance. Capital markets are being transformed right before our eyes, and Baxter details exactly how that is happening on a molecular level."
--Kyle Sonlin, host, The Security Token Show
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Back cover copy

Digital Finance: Security Tokens and Unlocking the Real Potential of Blockchain gives readers a fascinating and comprehensive look at how security tokens will be the next major milestone in the digital revolution. You'll learn about how these digitized forms of traditional ownership certificates will have momentous ramifications for mainstream assets like stocks, real estate, bonds, intellectual property, and derivatives.

Discover how security tokens offer capabilities, features, and innovations that are simply impossible with hard-copy certificates. Author Baxter Hines shows you how these riveting new digital tools combine world-class investor protections with supreme flexibility, exciting financial and technological professionals around the world.

The ideas presented in this book demonstrate how the digitization of assets will challenge and change the methods by which companies raise capital, opening up the process to a wider range of people and geographies. New investment ideas, many of which would have seemed impossible before, will arise.

Written in a straightforward and jargon-free way but lacking none of the rigor and data you'd expect to find in an industry-leading resource, Digital Finance explains exciting new digital developments in a way that anyone can understand. You'll learn a clear and concise framework for understanding security tokens and digital investments.

This book specifically discusses how the financial industry will be affected by the rapid growth of blockchain technologies and digital assets. With decades of experience in the financial industry, the author is uniquely placed to provide incisive commentary on the likely effects of the digital financial revolution.

Perfect for anyone interested in how digital assets like security tokens can and will impact the financial industry, Digital Finance belongs on the bookshelves of technology and finance enthusiasts and professionals around the world.
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Table of contents






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



Processing & Communications

Computer Science




Digital Identity

Digital Wallets




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


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?


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



Know Your Customer (KYC) & Anti-Money Laundering (AML)

Accounting and Reporting

Safety Mechanisms

Chapter 6. The Security Token Ecosystem

Fintech Companies


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


Countries at Forefront of Adoption






Key Countries

United States

Case Study: Ripple

European Union

United Kingdom



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


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


Institution Investors

Hurdles for Tokenization


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


Additional Resources

About the Author

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About Baxter Hines

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.
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