Kensington (Olympia), London—I caught up with Bankorus CEO and co-founder Gregory Van den Bergh at London’s Blockchain Summit to find out why he thinks security tokens could be set to change everything.
Blockchain technology has been touted as the catalyst for a new era of frictionless trade of just about anything, by using crypto tokens that are backed by physical assets.
That’s the concept, anyway, and Bankorus aims to pioneer a revolution whereby high-net-worth individuals (HNWI) can make their holdings much more liquid and can easily free up wealth—they say they’re already doing this for combined holders of USD 30 billion in assets already.
How to Save the Snowflake Generation
The sheer magnitude of the future security token industry is often missed out. It could do wonders for a generation in crisis – Millennials, who often find that the property ladder is not accessible to them.
“A lot of these young people will basically rent for ten years, save up for a downpayment and then pay it off until they are 70 years old,” Gregory says, “Securities tokens can solve this.”
The idea follows that a baby boomer, who might be asset-rich with low liquidity on their wealth, could benefit just as much as the young buyer of their house. The use of security tokens allow the seller to tokenize an entire asset, into as many pieces as they choose – but for simplicity’s sake say one hundred tokens to a home – and sell off portions as and when.
A person could then gradually take over ownership of a house directly from the homeowner, starting by buying just one of the tokens until they have all one hundred. Whether the buyer would live in the house for the duration, and pay proportionate rent to the majority owner, would come down to what would be agreed upon between the individual parties.
Opening up for Frictionless Trade
This is the vision that underpins Bankorus: vast amounts of wealth are locked in illiquid assets – on a hedge fund scale, but also with property-owning baby boomers as an example – and the ability to borrow against securities on tokenized liquid assets could help to create even more wealth.
But irresponsible practices from prime brokers leading to the 2008 financial crisis remains strongly impressed on Van den Bergh: “The problem with the financial crisis was that people didn’t know how many securities there were.”
“[The lesson] has absolutely not been learned, how many people went to jail?”
So caution is key for Gregory Van den Bergh and Bankorus, who see clear advantages in blockchain’s ability to facilitate transparent and immutable transactions. It could become very easy to track securities lending and see exactly what has gone where.
Early Days, Still
Even though big players from traditional finance and well-traversed investment areas are starting to look more at what they can do with crypto, there is still some way to go according to Gregory Van den Bergh, despite the fact that things have moved dramatically in the past year.
“You have smart investors that are gradually coming in now, a lot more HNWI [than before]. The older ones have more of an issue, and the biggest issue [for them] is custody. Remember, it’s really early days.”
The range of potential applications for security tokens make it an exciting, if yet wholly fulfilled, prospect for how wealth is created and, crucially, who gets it.
“I think we solve a big problem within crypto right now and that is the user experience, particularly for financial institutions looking to get on the blockchain. I think that’s the main thing.”
From what appears to be a finance perspective, concerned with creating a greater amount of wealth to benefit everyone, Bankorus is markedly different to a host of other platforms that look to blockchain as the realization of a more equal society: “It’s not about redistribution, it’s about creating extra value.”
Callum reports on developments in the cryptocurrency world and offers a take on the future of the blockchain. Can often be found with a cup of tea reading an altcoin whitepaper.