Synthetic versions of popular technology stocks like Apple, Tesla, and Amazon have started trading on blockchains, joining a growing pool of various crypto assets.
The digital assets are engineered to reflect the prices of the stocks that they reflect, but no actual trading of real stocks is involved. Although sales volumes are still just a tiny percentage of trades on actual exchanges, crypto enthusiasts are excited about the potential. For proponents, it’s a way to trade stock-like assets without any of the restrictions.
According to Fortune, the tokens, created by projects like Mirror Protocol and Synthetix, are trading on decentralized and automated markets like Uniswap and Terraswap.
Unlike traditional stocks, the synthetic assets manage to avoid all of the rules and barriers of the regulated financial world. Proponents call that a feature, rather than a bug. The way the fake stocks work is complicated, but they’re essentially designed to mirror the prices of the real securities. There are incentives for traders to mitigate price discrepancies, such as the ability to create new tokens when prices are too high or destroy tokens when they’re low.
Traders can exchange the synthetic stocks anonymously, 24 hours a day, and without restrictions like “know your client” rules or capital controls.
As mentioned earlier, the actual trading volume of the tokens is still very low. Mirrored Apple stocks, for example, have a market capitalization of about $34 million. Apple’s actual NASDAQ market valuation stands at about $2.3 trillion.
The tokens join a growing number of digital assets that leverage the blockchain, the underlying technology behind cryptocurrencies like Bitcoin. Other popular digital goods include non-fungible tokens (NFTs), which is a type of blockchain-powered asset that records ownership of digital goods.
The market for crypto assets is booming, as well. Back in June, an NFT of the original source code for the World Wide Web sold at auction for $5.4 million.
Of course, unregulated finance options like the synthetic tokens could soon draw the attention of enforcement agencies like the Securities and Exchange Commission. Billionaire crypto investor Mike Novogratz, for example, recently said that decentralized finance companies should start abiding by some rules soon to avoid the ire of regulators.
“Invest in a compliance layer now or pay the piper later,” Novogratz wrote. “If we want this ecosystem to grow we need to recognize we need to operate within the rules society sets.”
Keep up with everything Apple in the weekly AppleInsider Podcast — and get a fast news update from AppleInsider Daily. Just say, “Hey, Siri,” to your HomePod mini and ask for these podcasts, and our latest HomeKit Insider episode too.
If you want an ad-free main AppleInsider Podcast experience, you can support the AppleInsider podcast by subscribing for $5 per month through Apple’s Podcasts app, or via Patreon if you prefer any other podcast player.