Why Fractionalization Will Democratize Investments Into High End Art Pieces
One of the most common ways in which people find out about investments is either through word of mouth or through public sentiment by means of mass media. As is the case with Bitcoin, when prices were at all-time highs, everyone who owned bitcoin or any other digital asset could not stop talking about their exponential returns and neither could major broadcasters such as CNBC and Bloomberg resist from tracking the prices of bitcoin and other cryptocurrency on a daily basis.
This outburst in public sentiment is mainly the reason behind many market irregularities such as those witnessed in the cryptocurrency market in the past few months, however another factor which is very much overlooked is how much of these market irregularities are owing to the fact that an unlimited number of participants can potentially get involved in the process of buying and selling bitcoin and thus there is no cap to how many people could potentially be bitcoin holders unlike the art industry where the ownership of an asset is limited to one party and thus price is barely affected by the actions of others in that very same market. Where many people would feel very comfortable outlaying around $100 to be part of the value creation which is bitcoin, not a lot of people would exactly be considered candidates to purchasing a million dollar painting.
We imagine a future where owning shares to a million dollar art piece is as easy as owning a fraction of bitcoin or any other cryptocurrency. This very same concept of shared/fractionalized ownership has proven successful in fields such as real estate where it has been a massive success in democratizing investments into a relatively stable asset class outside your ordinary investments such as company shares. Today in most regions around the world, in order to open a brokerage account where one can purchase shares in publicly traded companies usually comes at a minimum cost of about a thousand dollars and this in itself limits the investment opportunities available to the ordinary citizen. Although owning a fraction of an art piece couldn’t exactly be likened to owning shares in a publicly traded company such as Amazon, both investments are relatively stable and owning shares to a piece of art overally carries the same amount of risk if not less than that of holding shares in a publicly traded company while the upside is equally matched. However where you would need a $1000 to invest in a public company we are making it possible to make a very much similar investment from as little as $1 through fractionalized ownership of art works.
The first implementation of our decentralized marketplace will follow a sole ownership standard made possible through the ERC721 Standard. Through the ERC721 Standard any one piece of art can only be owned by one single party as ERC721 tokens aren’t exactly divisible. However, our planned implementation of the fractionalized ownership marketplace will involve ERC20 tokens which are virtually infinitely divisible. This means a single piece of art can potentially have hundreds if not thousands of owners who can claim ownership through holding a digital token on the Ethereum blockchain. Where in the process of liquidating shares in a public company you would need to place in orders with brokers and wait days before the transaction clears with the bank, through the Stakeey dApp the route to liquidity will be much simpler through the implementation of a peer to peer exchange which allows market participants to trade their digital assets for their favorite cryptocurrencies. By allowing cryptocurrencies to be used for transactions, unlike in liquidating shares, settlements will be processed in seconds rather than days.
To provide a better understanding of how we imagine fractionalized ownership taking effect on our marketplace, we are going to provide a brief example detailing the process a piece of art will follow from the process the listing is created right through to the process where the tokens will be tradeable on exchanges. In a scenario where someone who owns a piece of art which they value at a million dollars and now decides to list the art piece on our marketplace, we will provide them with an option to sell us a fraction of their art piece. For explanatory purposes we will assume this art owner agrees to sell 2% of the million dollar piece of art. We will then issue a million tokens, each representing a dollar’s worth of the proposed value. Once we receive the art piece, we will release 980 000 tokens to the owner of the art piece while withholding 20 000 tokens which represents the 2% which Stakeey would have purchased. After releasing the 980 000 tokens to the owner of the art piece we will proceed to open a market for that art piece by allowing those tokens to be traded on the Stakeey peer to peer exchange. Anyone who is interested in owning a little piece of that art can simply go onto our peer to peer marketplace and purchase the token representing that artwork from the various market participants on the Stakeey decentralized application.
Today, an art piece such as The Monalissa can only be owned by one single party and realistically the only people who can afford this investment would be high net worth individuals, however through fractionalization a billion dollar piece of art can have thousands if not millions of owners who can all claim ownership from as little as $1 which affords a majority of the unbanked and those that are unable to afford the $1000 asked by most stock brokers to access investments in a relatively stable asset which much like company stock or bitcoin has room for appreciation. We believe this will afford many cryptocurrency owners the opportunity to diversify their crypto holdings across a non-correlated market without incurring the expenses of converting back into fiat and in the long term democratize an investment which has been generally only been available to high net worth individuals.
Find out more about Stakeey:
Facebook: https://www.facebook.com/stakeey/
Twitter: https://twitter.com/stakeey_
Website: https://stakeey.com/
Token Sale: https://stakeey.com/token-sale.php
Github: https://github.com/Stakeey
Email: hello@stakeey.com
Published at Sun, 14 Jul 2019 03:38:22 +0000
Bitcoin Pic Of The Moment
By gilvalentine1227 on 2014-02-12 09:25:54
