Commission-free online trading platforms have dominated the market, attracting a new wave of retail investors since the onset of the pandemic in 2020. Throughout 2021, global online retail trading surged to record volumes exceeding $8 billion. This influx of users, primarily millennials and Gen Z, has reshaped the traditional demographics of the stock market.
The rise of "Generation Investor," with a median age of around 35, contrasts sharply with the pre-pandemic era when the median age of traders was 48. Social networks and mobile trading apps have played a pivotal role in fostering a community that now influences over 20% of total worldwide trading volume. Notably, the GameStop saga in January 2021 highlighted the disruptive power of retail traders, prompting a need for transparency and accountability in the industry.
The demographic shift is not without challenges. Platforms like Robinhood faced backlash and legal repercussions after restricting trading during the GameStop incident. The crypto world, too, grapples with issues such as hacks and data leaks, eroding trust among traders. Recent incidents, like the hack on Crypto.com, underscore the importance of transparency and security for platforms holding vast sums on behalf of users.
Tokenization of assets emerges as a solution to enhance transparency and democratize retail trading. Blockchain technology enables the transparent and immutable recording of ownership, offering a 24/7 trading environment and eliminating time zone restrictions. Blockchain automation facilitates faster and more cost-effective trading, ensuring information accessibility and verification for all users. Tokenization also simplifies trading diverse asset classes on a unified platform, removing entry barriers and enabling fractionalized shares for a more inclusive investment landscape.
To truly empower amateur traders and uphold the ideals of democratization, online trading platforms must prioritize user-centric design, accessibility, and accountability. Retail investors, now a formidable force, demand platforms that meet their expectations in terms of transparency and accessibility.