When someone mentions equity markets, what comes to mind? Maybe nothing, but if we call it in its more widely known name, the stock market, so many scenes vividly appear. The Wolf of Wall Street and other Hollywood movies depict the stock market as a fervent pit hole with an obscene amount of activity simultaneously taking place. This depiction is accurate in some aspects as we will see.
The equity market is a place where buyers and sellers trade shares they own that belong to a particular company. When a company wants to raise capital in from of liquid cash, they can decide to go public. This means that they offer ownership of part of their company to those who will buy their company shares. Shares are evidence that you invested in that company and you are entitled to certain privileges. At the time of the IPO (initial public offer), the share price is calculated to represent the value of the company at that time. Companies lay out their strategy to potential shareholders to try and convince them that the value of the shares will grow as the company also grows. Most buyers become shareholders because of the prospect of this growth. The hope that these shares will be sold for a greater value attracts people even more. Trading of stocks (or shares) is a win-win situation for both the company offering them and the buyers. The company gets the capital it requires to carry out its plans and the shares keep on trading in the stock markets where the fluctuation in share prices causes some shareholders to gain from the sale of these shares. Another advantage of owning shares that shareholders experience in established companies is the distribution of dividends. Companies may make a lot of profit and decide to give a part of this profit to each of its shareholders as dividends. This arrangement usually attracts traders to deal with stocks from such companies. It is not a requirement for companies to issue dividends.
Equity markets are important in every economy. They give life to companies through the capital raising opportunities they give to companies. They are also an indicator of the state of the economy. Rising stock prices show that the economy is healthy and more investors are willing to plough their money into the economy. Declining stock prices show uncertainty in the market. This causes investors to pull out of such economies therefore resulting in a sale of the stocks they owned. The offloading of stocks by these investors causes their prices to drop hence stock prices can be used as economic indicators. Investors sometimes purchase stocks due to speculations of a rise in a particular industry. Some of them even end up taking loans to purchase these stocks. These speculations may be right or wrong sometimes but it does create some uncertainties in the market.
In trading of stocks, investors are rarely directly involved with the purchasing. Stock brokers are contracted to trade on their behalf. They do this at a fee of course and sometimes, because of adverse selection and broker collusion, you may end up losing a percentage of your investment money. The ownership of the stocks may also fall under a different name that is not yours. These are just some of the flaws that are present in the current arrangement of equity markets. There is no direct link between the buyer and the seller of stocks which may also be a cause for uncertainty.
The system that is currently in use in the equity market has not changed as much since the first time it was introduced. The use of middlemen to trade stocks is still a common practice even in this technological age. There are a few additions that have helped move stocks faster but some challenges are constant. The 21st century has seen a decline in the number of companies going public. This change can be attributed to the problems new comers have observed in the stock markets.
The younger generation is skeptical about investing in shares after the 2008 financial incidence that shook the world. Transparency is one of the key complaints that are raised by the young generation. They have a general understanding of how equity markets work but they are not sure of why prices fluctuate or how companies are really valued. The recent investment in smartphone application companies have not helped. Remember the technological bubble in 2001, the dot com bubble which saw a number of companies sink because of speculation in the stock markets? This is still fresh in the minds of millennials. There is the second technological bubble that has been talked about and is still being talked about as speculators try and predict when it will burst. There are investors pumping millions of dollars into smartphone application companies hoping to generate some profit while the market is still young, the problem is that there are already established applications that have achieved what these new applications want to. Some companies have also ended up being over valued because of all the hype surrounding smartphone applications further fueling speculations. Such are the issues that further deter millennials from investing in equity markets.
With the adoption of technology, new threats have also emerged. In previous years, the open outcry method was used to find buyers and sellers of stocks on the trading floor. The technology that we have today has allowed us to do away with that system and introduce one that is faster and more efficient than open cry. Computerized trading increased the amount of stock that could be moved in a day which was a great win for traders. The downside with this type of trading is the centralization of this system which makes equity markets susceptible to cyberattacks or server crashes. Equity markets could be easily paralyzed if a network within their systems is infiltrated. Illegal traders may have a field day if they were to access a centralized system. Extremes such as cyber terrorists taking down entire markets could also be possible. As much as there are numerous security features that have been placed, hackers are getting smarter by the day.
There is a need to revamp equity markets around the world. The stock market is already modernized but it just needs some refinement to make it operate as smoothly as possible. Chainium is the company that will revolutionize the stock market. It aims to decentralize the stock market, increase transparency within the stock market and reduce the costs incurred in trading of stocks. These are weighty issues that require proper planning and implementation. Chainium is up to the task as it has its head set on achieving its goal in equity markets.
Chainium is basing its revolution on three pillars of its system. It has security, business and technical pillars that will be joined together to provide traders with a robust system that is far much better than what is currently in place. Any system that will deal with sensitive data requires high level security. This cannot be achieved by mere installation of security systems but it has to start right from the lowest ranked employee in Chainium. There was an incidence in 1999 in a certain company where a former employee left the building with a list of clients of the company and their credit card details. The culture of security is very important to Chainium because of such incidences. Anyone can be a security threat unless they have been properly vetted especially in such a company. Chainium takes it recruitment as well as dismissal of staff very seriously. In its security plan, Chainium will link up its IT department with its human resource department such that any new employee or any employee leaving the company does not cause any security threat. Measures will be taken that will ensure they leave with no sensitive information. Chainium plans to conduct training and workshops for its employees to equip them with skills that will help them notice any suspicious material in their network. Scenarios will be carried out to give their employees an experience of how an attack would ensue. This will help them quickly recognize any questionable activity and flag them off for assessment by Chainium’s security experts. Chainium will consult with various security experts to come up with the best defense solutions for their network.
Still on security, the personnel and the buildings which will house Chainium assets will be protected round the clock. Having access to this system is a security risk in itself and Chainium does not want its employees or its clients to suffer from this. Standard and advanced security measures will be placed in Chainium facilities to help avert any attacks. For more information on the security that Chainium plans to have, visit https://www.chainium.io/uploads/files/Chainium-Security-Whitepaper-v15_2.pdf.
Technologically, as mentioned before, Chainium is built on the blockchain platform, specifically Ethereum blockchain. The Ethereum blockchain is widely used because it allows developers to come up with smart contracts. Developers can set the parameters for any form of transaction that will take place in Chainium. It directly links the buyer to the seller and can be used as a record for future reference. No transaction can be initiated unless the set parameters are met. Smart contracts create trust in a system. The data that will be flowing in Chainium is probably going to be great and may not be fully handled by blockchain; therefore Chainium will only store transactional data on blockchain while all other data will be stored in an off-chain data storage system. To learn more about the technical aspect of Chainium visit https://www.chainium.io/uploads/files/Chainium-Technical-Whitepaper-v25_2.pdf.
The main reason for adoption of these systems is the creation of a decentralized, transparent and secure equity market platform. This will be the business aspect of Chainium. As mentioned earlier, the equity markets still have elements of the past that need to be sorted out in order for them to grow. The main reason for any company to go public is to raise capital. Companies want people to invest in them with the prospect of getting good returns. The current system however has so many hurdles that prevent this from happening. Chainium wants to create a direct link between the buyer and seller of the shares. Eliminating the middleman will save a lot for both parties and will create the much-needed transparency that many have been pleading for in the equity markets. The direct approach for funding to get capital will also save a lot of time and money. There is a lot that goes into planning go of an IPO event. Papers have to be filled and signed, services have to be paid for and consequently the current system just consumes more than it should. With a direct system however, all these processes are done away with. The buyer and the seller are the only ones remaining to negotiate the terms of the sale.
There are benefits that each party will get while using the Chainium platform. The owner of the company will receive a direct link to buyers who are willing to invest in what is being sold. Prices per share are likely to be better compared to the current equity market as some cash draining activities will have been by passed. Companies that will gain profit and chose to pay dividends to their shareholders will have an easier time doing so. The system that Chainium is based on will allow companies to make payments in fiat, cryptocurrencies, more shares or other corporate rewards. The smart contract system that is available on the Ethereum blockchain will be able to calculate the number of dividends each shareholder is entitled to and distribute them. So much is set to be saved using the Chainium platform. There are also conveniences that Chainium will offer in their platform to business owners such as the option to interact with their shareholders in the Chainium platform. Processes such as voting may also be done through Chainium which will give the owner of the company a much easier time in decision making as shareholders can give their insight at any moment using their smartphones. Chainium has extras that will require one to pay some fees to receive these services. Investment insight and advice on how to raise capital will offered by Chainium as their system, together with Chainium specialist, are able to predict certain outcomes depending on the behavior of investors in the Chainium platform.
Investors in the Chainium platform will have opportunities like never before in this system. Certain investments are normally limited to a caliber of investors through their middlemen who control trading in equity markets. With Chainium, every investor will have an equal opportunity of investing in whichever company they want, whether it be listed or non-listed, Investors can plough in their money. They will also be linked directly to the owner of the business. This personal touch is inadequate in the current equity market system yet it is vital in creating trust between trading parties. Just like the owners, investors will also have some of their services charged, at a reasonable fee of course. Services such as advice on investment will be vital to investors who are always on the go and need to see results. They will get the best investment options as per data collected on company performances within Chainium. Chainium will also provide investors with data on how their investments are performing in all businesses they invested on.
All the Chainium services offered will be done so conveniently through smartphone applications. Smartphones are the now in technology and every system has to be built around it for purposes of convenience. Trading in equity markets will be far much simpler and convenient in Chainium because of the use of smartphones.
Chainium will have a utility token known as the CHX. CHX will be used by Chainium to create trust in the platform. Owners of companies that will be selling their shares in Chainium will be required to link their shares to a certain amount of CHX in a smart contract. This will prevent fraudsters who would want to swindle users in this platform. Buyers will have confidence that whatever they are purchasing is legitimate unlike in the current system where companies can have ways of selling non-existent shares. These tokens can also be used to pay for services within Chainium such as paying for advice requested in the platform.
Chainium will be having an ICO that aims to collect funds that will develop this idea into an actual system that can deliver results. The equity market needs to be revolutionized and it can only be done through the support of every believer of this need. It will also be used to create a community who will be trading primarily on CHX. The token sale is slated for March 2018. A few days prior to the end of the token sale, CHX will be distributed to the buyers. To take part in revolutionizing the equity market and to learn more about the token economics please follow any of the links below.
Website- https://www.chainium.io/
Facebook- https://www.facebook.com/chainium.io/
Twitter- https://twitter.com/ChainiumIO
Medium- https://medium.com/@chainium
Telegram- https://telegram.me/chainium