During the gold standard era, people didn't carry heavy gold bars in their pockets to make purchases. Instead, they safely deposited their gold in bank vaults.
Banks issued paper certificates as proof of their gold deposits, which were the original "paper money (dollars)."
At the time, a $10 bill was like a "gold depository receipt" that promised, "I'll exchange it for $10 worth of gold at any bank." People kept the physical gold in the vault, exchanging only the lightweight depository receipts (bills) for convenience.
Surprisingly, today's stock market operates exactly like this old gold standard system.
Suppose we bought Samsung Electronics or Tesla stock through a brokerage app (MTS). Would our names be directly listed on the company's shareholder register? No.
Just like gold in a bank vault, all physical stocks (either physical or electronically registered originals) are stored in a centralized vault like the DTCC (Depository and Clearing Corporation of America). Through a securities firm, we simply hold a digital record—a stock depository receipt—that states, "I have the right to one share of the stock held in that vault."
So, rather than exchanging physical shares, we're merely transferring ownership of the "stock depository receipt" between us over a network.
- With the advent of blockchain technology, a movement to revolutionize this system, namely "tokenization," has begun.
A crucial fork in the road emerges here. The meaning changes slightly depending on the question of "what to tokenize."
1/ Model A: Keep the stocks in the depository as before, and tokenize the "stock depository receipt (rights)".
2/ Model B: Bypass the depository and tokenize the "stock itself."
There are two methods...
- Of these, Model A, tokenizing the "deposit receipt," may seem similar on the surface, but it makes a significant difference in speed and cost. Here's why:
Currently, financial institutions maintain their own separate ledgers (Excel files).
When Bank A sends stocks to Securities Company B, the "reconciliation" process alone—verifying that their accounts match—takes two to three days and costs hundreds of billions of won.
However, if deposit receipts are tokenized and placed on the blockchain, all financial institutions will be able to view a single, shared ledger in real time.
This eliminates the need for arguments like, "My ledger is different from yours!" and shifts stock transaction settlement from t+2 days (a three-day process) to t+0 (immediate settlement).
Furthermore, when settlement took three days, a significant amount of "margin (deposit)" had to be tied up to protect against unforeseen events. With immediate settlement, this money can be freed up and invested elsewhere. To use an analogy, it's like replacing the traditional process of exchanging and stamping contracts by mail with a real-time, shared document like Google Docs, allowing for simultaneous work.
In other words, work processing speeds are dramatically increased.
- And if the "stock itself" is tokenized, as in Model B,
bypassing a central vault like the DTCC, tokens held in personal digital wallets become stocks, transferring complete ownership of the stocks back to the individual.
As a result, stocks can be traded peer-to-peer (P2P) with anyone around the world, even on nights or weekends when the stock market is closed.
You can use the "Apple stock tokens" in your wallet as collateral and instantly borrow dollars (stablecoins) from DeFi protocols without bank review.
Stocks go beyond mere investment assets; they can be freely combined with various financial products, like Lego blocks. We can say we own something when we can use it as we wish. Currently, the financial system doesn't fully own each stock, so we can't freely lend or use it.
But if tokenization makes those stocks our own, we can freely lend them out and use them as collateral for loans.
This is through blockchain DeFi services.
- To summarize,
Just as we used gold warrants (dollars) until now, we are now trading stock warrants (rights to receive payments).
However, tokenizing 'warrants' can maximize efficiency by eliminating complex paperwork and waiting times between financial institutions.
And tokenizing 'stocks' themselves will give individuals direct control over their stocks, enabling 24-hour trading and free financial use (DeFi).
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