05 Aug How NEM Blockchain Can Potentially Revolutionize Stock Markets
Share trading essentially has remained unchanged since the 17th century. While most of the exchanges have shifted to an electronic model and trades are conducted faster than ever before, the truth is that there is still a central intermediary in stock trading, and this is perhaps the biggest weakness of the system.
Bringing the Blockchain to the system holds the promise of building decentralized exchanges in the future. The wider DIM Ecosystem comprises of DIMCOIN, DIMCOIN Foundation and other constituents.
The technology is based on the NEM Blockchain technology and seeks to revolutionize the way securities are traded. The DIMCOIN Initial Coin Offering (ICO) is currently underway and will end on Aug. 27, 2017.
What is the DIM Ecosystem
The DIM Ecosystem is made of DIMCOIN, which is a cryptocurrency, which can be traded on exchanges against other cryptocurrencies as well as DIM Currencies, which are equivalent to fiat currencies.
Overall the DIM Ecosystem can help in cryptonization of equity, trading in shares and assets that have cryptonized, cryptocurrency exchanges, crypto-fiat currency exchanges, e-commerce and debit card purchases.
In addition, the DIM Ecosystem can also help with business transactions and commodity trading.
DIMCOIN launched their ICO on July 16, 2017, and they have set a maximum cap of 10 mln DIM TOKENs. One US dollar is equal to one DIM TOKEN + 100 DIMCOIN.
It is noteworthy that the tokens are a representation of the ownership of the DIM Ecosystem as a whole. Investors who have more than 50 DIM TOKENS will receive 30 percent of the net fees earned on the DIM cryptocurrency transfers within the ecosystem, depending on percentage ownership of tokens.
We asked Uros Trajkovic, Social Media Executive on the DIMCOIN team about their vision surrounding the ICO and he says:
“Our vision for the DIM Ecosystem is to get it on its feet. Our main objective is to utilize the funds raised during the ICO for this purpose. We will acquire the skilled labor and facilities that will get the DIM Ecosystem functioning.”
Bonus DIMCOIN are available to early investors: until Aug. 19 there is a 10 percent bonus and from Aug. 20-27 a five percent bonus. DIM has released a whitepaper that layout the detail of their ICO plans but broadly the fund utilization will be based on the below diagram.
Can DIM revolutionize the markets?
Current trading practices have several issues. At the most what we have today is just speeding up of archaic practices. The number of intermediaries required to execute trades like stock transfer agents, depositories and registrars, etc. remain in the picture. There are significant counterparty risks involved as well.
Stock market products like Equity Traded Funds (ETFs) have significant issues like tracking errors, which can cause losses to investors. Uros believes that DIM can help remove ETF tracking errors, but he thinks that the biggest issue with the current state of the markets is transparency.
He tells Cointelegraph:
“The major problem facing mainstream trading platforms is the lack of transparency. The players in the traditional trading platforms are not transparent enough, hence making it difficult to eliminate or reduce such risks. Blockchain is transparent by design, users can trace transactions and monitor their investments without third parties.”
DIM will be utilizing the Hybrid Stock Exchange (HYBSE.com) to facilitate the trading of their cryptonized securities, which will be a part of the Ecosystem. This exchange was formed by a group of financial and software experts who were formerly employed by the Frankfurt Stock Market. The trading will eliminate over regulation, high fee and long transaction times.
Fiat use will help raise public awareness
An interesting facet of the DIM Ecosystem is the use of DIM Currencies. Fiat currencies can be exchanged in the ecosystem against DIM Currencies, the value of the DIM Currency is tied to the respective fiat currency. Assets are valued in DIM Currencies in the DIM Ecosystem.
“We believe that the more services and products offered in DIM Currencies, the more the general public will accept it. The more routine transactions are done, the better. The process of creating a Depotwallet account is made as simple as possible. This was deliberately done to make it acceptable to the general public.”
It is interesting to see how the DIM Ecosystem will evolve in the future and how it reshapes the equity markets, equity products and other segments like the commodities market.
However, one thing is for certain that it will have an impact on the good old fashioned stock market and the investors who may end up benefiting from an era of low or no fee and higher transparency.