The established financial infrastructure looks archaic by any measure. CDRX is a start-up that is working to eliminate waste in the worlds largest financial exchanges. A publicly traded company is an extremely simple idea. The trade in stocks and other associated corporate actions is far less efficient than it could be.
CDRX is preparing to launch an international exchange for their Crypto Depository Receipt products (CDRs). A CDR is a token that transfers ownership of equity, debt to a token. Much in the same way that a share in a company gives a person rights within a corporation, a CDR can fulfill the same role. In addition to making the entire process less costly, the CDR model will allow fractional ownership of assets.
According to the World Bank, more than USD 70 trillion worth of equities were traded last year. Every time a stock is traded, a broker or investment bank is able to make a commission. When the stock market dealt in physical shares and needed to maintain detailed records of ownership in big books, this made sense. Today, CDRX could be on the edge of changing how all types of securities are traded.
CDRX has room to grow
The vast majority of financial operations that take place at a corporate level could probably be done better by smart contracts. Voting, the payment of dividends and stock splits all require a lot of accounting work. Smart contracts remove the need for human involvement in corporate record-keeping.
Instead of attending an annual meeting to vote on the direction a company should take, shareholders could vote via smart contracts. The cost savings for all involved would be substantial. When dividends need to be paid, smart contracts can also remove lots of accounting work.
All of a shareholder’s rights can be transferred automatically when they buy a CDR, which is why CDRX is a potentially revolutionary product. Additionally, if a person wants to buy a small part of an expensive share, like Apple, they would be able to buy as much as they could afford. This is a big benefit for expensive cryptos as well, such as bitcoin.
For now, CDRs are limited by regulations regarding how equities can be traded. In the USA the JOBS Act can allow trading in CDRs and crypto share products. The cap on capital raised in this manner is limited to $50 million per company, which is great for smaller issuance. It will likely take regulators some time to catch up with the innovation that blockchain creates, so CDRX is getting in at the beginning of a potentially massive shift in how financial markets operate.
A bigger picture
CDRX’s platform is also designed to handle just about any other kind of token as well, which makes their business model viable regardless of how slowly regulators allow the integration of CDRs. They will be joining a number of other exchanges that seem to be tapping into a real need. Coinbase has been able to grow into a multi-billion dollar company, which is a good signal for the crypto-exchange business model.
There are still a relatively small number of people globally who trade or use cryptos. As the recent implosion in the Turkish Lira demonstrates, as fiat currencies fall, cryptos appeal to a much wider demographic. A healthy exchange economy will also probably help cryptos gain popularity globally, and allow traders and investors to realize the best rates possible.
Nicholas Say was born in Ann Arbor, Michigan. He has traveled extensively, lived in Uruguay for many years, and currently resides in the Far East. His writing can be found all over the web, with special emphasis placed on realistic development, and the next generation of human technology.