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

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In Digital Finance: Security Tokens and Unlocking the Real Potential Blockchain, readers will realize why security tokens are creating huge excitement in the financial industry. By combining the latest in technology and the potential for automated world-class investor protections, regulatory compliance and customer service, security tokens offer a plethora of benefits that will drive cost reductions, enhance flexibility and open up opportunities for new business models and revenue streams. Digital Finance thoroughly examines how this powerful technology can overhaul our current financial infrastructure in a way that will increase efficiency, transparency, and security.

Topics include:



How to think about investments in the digital space
How blockchain and distributed ledger technology are disrupting the financial industry
Security tokens and how they are the next major breakthrough for investing
How digital assets open new opportunities and provide cost savings benefits
How blockchain technology has created new, efficient ways of fund raising and investing
The ways tech companies are building a new, more interconnected financial network fabric
How multi-national corporations like IBM, Fidelity Investments and AXA are already deploying blockchain and tokenized solutions
Case studies, historical perspectives and latest trends that offer perception as to how this exciting new space will develop
How countries around the world are embracing this new phenomenon and how regulators are taking notice

How assets currently only available to select institutional investors could become marketed to the mainstream
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Product details

  • Hardback | 208 pages
  • New York, United States
  • English
  • 1. Auflage
  • 1119756308
  • 9781119756309

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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

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
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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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