The dramatic short squeeze of the stock of video game retailer GameStop this January was the moment when r/WallStreetBets finally transformed from a humble Reddit forum into a financial force that can no longer be ignored. But lost among the memes, trading app drama and hand-wringing over the sanctity of the stock market was one surprising outcome: GameStop’s share price didn’t just rise — the company actually listened to its many new retail investors and aggressively ramped up its strategy to focus on e-commerce. Rather than just a one-off market glitch, the investments made by r/WallStreetBets users resulted in the real transformation of a company that many in Wall Street had been predicting the demise of.
Related: GameStop inadvertently paves the way for decentralized finance
You’d think Wall Street types and their fan club in Congress would be hailing this as a rare triumph of market evangelism. But the wrong people made money out of this event so, in their eyes, the GameStop episode was a dangerous fluke.
The stock market remains in the hands of self-dealing and corrupt institutions. But just because the traditional market is rigged with rules that shift with the elites’ moods doesn’t mean that everyday retail investors should cede all shareholder control and abandon trading equity entirely. Instead, a hybrid model incorporating cryptocurrency and bringing tokenized shares of companies onto a blockchain ledger for people to buy, sell and exchange, can help to build a better, more transparent stock market accessible to all.
Since I founded the r/WallStreetBets subreddit in 2012, the community has grown immensely and undergone a number of changes. Until recently, discussion of crypto tokens was considered off-limits among r/WallStreetBets users. But the popularity of innovative trading apps has helped to close the gap between stocks and digital assets. r/WallStreetBets’ latest initiative aims to create exchange-traded products, or ETPs, which function like traditional ETFs but instead allow community members to buy indexed shares of cryptocurrencies as well as shares of companies like Tesla or Facebook.
If, as expected in the future, more companies start tokenizing their shares on the blockchain, not only will they assist in creating a more democratic market, but they’ll benefit from a number of technological efficiencies and gain access to a powerful army of retail investors.
Related: Understanding the systemic shift from digitization to tokenization of financial services
Tokenization of financial services
As friendly as the market can be to large institutional players, old methods of raising capital still present a number of challenges and outdated protocols for most companies. The stock exchange’s strict rules help some more than others, as does the willingness of banks and financial institutions to issue credit and handle general difficulties for business owners convincing private investors to get involved. With tokenized…
Read More: Tokenized shares bridge trading gap on blockchain