The principles of finance will not be changed by blockchain, however, the future of finance will definitely be shaped by blockchain. Carlos H. Fernandez Mazzi explains why the new technologies are a paradigm shift and introduces a real world use case.
Financial inclusion and cross border capital flows are a case in point. The barriers to entry in traditional financial markets, ranging from the unavailable financial services for the poor in the developing countries all the way to difficult access to capital for potential enterprises the world over, represent real challenges that have been common over the years.
Blockchain technology and decentralised finance eliminate intermediaries and thus reduce the barriers for investors in two important aspects:
1) Individuals can digitally access investment opportunities just as easily as using social media or performing online research via their mobile phone. Direct access allows smaller investors to make their own investment decisions, leading to inclusion in the larger world of finance and empowerment as active economic participants without discrimination.
2) Access to capital can be envisioned on a global scale by allowing promising enterprises to be featured on the international stage and attract the interest of investors looking for opportunities beyond their borders. In addition and very importantly, fractional ownership enabled by blockchain is an enabler for the democratisation of capital by opening investment opportunities for retail investors of any size and in any jurisdiction.
Such a disruption in financial inclusion allows value-creators, entrepreneurs and economic opportunities access to the world stage and compete on the merits of their individual benefits as well as their own risk-reward profile. Likewise, for investors in search of new opportunities as well as new frontiers, we can envision a world of more democratic access to capital and with significant impact.
The Finka Token, a Swiss based security token is a revenue-sharing financial instrument supported by an underlying liquid asset and enabled by blockchain. This innovative security combines technology and the forward sale of future revenues in the traditional cattle industry operated by the Swiss company Finka GmbH through its own subsidiaries. Interestingly, cattle Ranching — a highly liquid ancient activity that converts grass into protein with stable costs and predictable revenue — does not have any financial instruments for the common investor. The Finka Token changes this by encapsulating the value creation of cattle ranching and effectively converges a conventional productive process with crypto-finance, making it accessible to the retail investor.
Beyond the positive environmental and social impact, the Finka Token is a financial instrument with significant impact. By leveraging the power of blockchain, the Finka Token aims to democratise access to capital and reduce friction by eliminating intermediaries and reducing the transactional costs. Furthermore, the Finka Token pioneers the creation of digital securities following strict compliance guidelines, financial discipline and accounting standards and effectively reduces the barriers for cross border capital flows and is available to the retail investor in any approved jurisdiction.
In response to this development, CV VC is introducing the Digital Assets category as part of its investment model in addition to VC investments. The Finka Token is the first investment in this new category. CV VC is convinced that a digital ecosystem of startups which solve critical problems by using blockchain technology has enormous potential. Moreover, tokenization of illiquid assets represents a great opportunity to expand the investment landscape for both institutional and retail investors with a global reach.
Security Tokens and Financial Impact — The Future of Finance was originally published in CV VC on Medium, where people are continuing the conversation by highlighting and responding to this story.