Journal Publications
Hostile Activism: Hostile Tactics or Hostile Hedge Funds? (with Ehsan Nikbakht and Andrew Spieler)
Journal of Financial Research (forthcoming)
This research examines reputation building by activist hedge funds and provides two new findings regarding hostile activism. First, there is evidence of a permanent reputation effect to hostile activism. Activist hedge funds that previously engaged in hostile tactics receive on average a 3% higher CAR [-10,+10] on their subsequent non-hostile campaigns, compared to hedge funds that have not previously engaged in hostile tactics. This abnormal return is positively related to the level of the hostile reputation of the activist hedge fund. Second, results indicate that activist hedge funds with higher hostile reputations modify their non-hostile activism style to engage “hostile-like” targets and pursue “hostile-like” objectives but withhold the use of explicitly hostile tactics. These findings imply that (1) hedge funds can build a hostile reputation using their past engagement tactics and (2) market participants perceive and value such reputation as evidenced by the higher announcement return observed in subsequent targets.
Journal of Financial Research (forthcoming)
This research examines reputation building by activist hedge funds and provides two new findings regarding hostile activism. First, there is evidence of a permanent reputation effect to hostile activism. Activist hedge funds that previously engaged in hostile tactics receive on average a 3% higher CAR [-10,+10] on their subsequent non-hostile campaigns, compared to hedge funds that have not previously engaged in hostile tactics. This abnormal return is positively related to the level of the hostile reputation of the activist hedge fund. Second, results indicate that activist hedge funds with higher hostile reputations modify their non-hostile activism style to engage “hostile-like” targets and pursue “hostile-like” objectives but withhold the use of explicitly hostile tactics. These findings imply that (1) hedge funds can build a hostile reputation using their past engagement tactics and (2) market participants perceive and value such reputation as evidenced by the higher announcement return observed in subsequent targets.
Returns and network growth of digital tokens (with Ehsan Nikbakht )
Journal of Corporate Finance, 101853, vol 66, 2021
This paper examines the role of cross-listings in the digital token marketplace ecosystem. Using a unique set of publicly available and hand-collected data from 3,625 tokens traded in 113 marketplaces, we find significant increases in price, trading volume, network growth and on-chain activity around the date of a token’s first cross-listing. Tokens earn a 16% crypto-market adjusted return in the two weeks around the cross-listing date. Daily network growth triples on the day of cross-listing. Using the uniquely heterogeneous characteristics of token marketplaces, we identify specific value-creation channels. We provide the first evidence supporting value creation through network externalities proposed by recent token-valuation models. Consistent with equity cross-listing theory, we find higher returns for cross-listings that reduce market segmentation and improve information production. Our reported findings have significant policy implications in terms of more transparent regulations to reduce financial misconduct in the digital marketplace.
Journal of Corporate Finance, 101853, vol 66, 2021
This paper examines the role of cross-listings in the digital token marketplace ecosystem. Using a unique set of publicly available and hand-collected data from 3,625 tokens traded in 113 marketplaces, we find significant increases in price, trading volume, network growth and on-chain activity around the date of a token’s first cross-listing. Tokens earn a 16% crypto-market adjusted return in the two weeks around the cross-listing date. Daily network growth triples on the day of cross-listing. Using the uniquely heterogeneous characteristics of token marketplaces, we identify specific value-creation channels. We provide the first evidence supporting value creation through network externalities proposed by recent token-valuation models. Consistent with equity cross-listing theory, we find higher returns for cross-listings that reduce market segmentation and improve information production. Our reported findings have significant policy implications in terms of more transparent regulations to reduce financial misconduct in the digital marketplace.
- Presentations: Babson College, Boston College, Bowdoin College, HBS Entrepreneurship and Innovation Seminar, MIT Digital Currency Initiative, ESE Business School, Universidad de Chile.
- Conference presentations: 2nd Toronto FinTech Conference (Best PhD paper Award), FMA Applied Finance Conference, SKEMA-JCF Fintech and Digital Finance Conference, 2019 FMA Annual Conference (Best paper nominee, Market Microstructure category)
- Press coverage: MVIS one hundred.
Digital Tulips? Returns to Investors in Initial Coin Offerings (with Leonard Kostovetsky)
Journal of Corporate Finance, 101786, vol 66, 2021
Initial coin offerings (ICOs), sales of cryptocurrency tokens to the general public, have recently been used as a source of crowdfunding for startups in the technology and blockchain industries. We create a dataset on 4,003 executed and planned ICOs, which raised a total of $12 billion in capital, nearly all since January 2017. We find evidence of significant ICO underpricing, with average returns of 179% from the ICO price to the first day’s opening market price, over a holding period that averages just 16 days. Even after imputing returns of -100% to ICOs that don’t list their tokens within 60 days and adjusting for the returns of the asset class, the representative ICO investor earns 82%. After trading begins, tokens continue to appreciate in price, generating average buy-and-hold abnormal returns of 48% in the first 30 trading days. We also study the determinants of ICO underpricing and relate cryptocurrency prices to Twitter followers and activity. While our results could be an indication of bubbles, they are also consistent with high compensation for risk for investing in unproven pre-revenue platforms through unregulated offerings.
Journal of Corporate Finance, 101786, vol 66, 2021
Initial coin offerings (ICOs), sales of cryptocurrency tokens to the general public, have recently been used as a source of crowdfunding for startups in the technology and blockchain industries. We create a dataset on 4,003 executed and planned ICOs, which raised a total of $12 billion in capital, nearly all since January 2017. We find evidence of significant ICO underpricing, with average returns of 179% from the ICO price to the first day’s opening market price, over a holding period that averages just 16 days. Even after imputing returns of -100% to ICOs that don’t list their tokens within 60 days and adjusting for the returns of the asset class, the representative ICO investor earns 82%. After trading begins, tokens continue to appreciate in price, generating average buy-and-hold abnormal returns of 48% in the first 30 trading days. We also study the determinants of ICO underpricing and relate cryptocurrency prices to Twitter followers and activity. While our results could be an indication of bubbles, they are also consistent with high compensation for risk for investing in unproven pre-revenue platforms through unregulated offerings.
- Financial press coverage: The Economist, Bloomberg, The Wall Street Journal, Nasdaq, Marketwatch.
- Top 10 Most Popular Fintech Related Papers on SSRN.
- SSRN Weekly Top 5 Papers for weeks of 5/28/2018, 6/4/2018, 7/16/2018, 7/23/2018.
- Conference presentations: 2019 FMA Annual Conference (Best paper nominee, investments category)
Blockchain and Corporate Fraud (with Ehsan Nikbakht, Sayan Sarkar and Andrew Spieler)
Journal of Financial Crime, 0187, 09, 2020
Financial fraud is not bounded or constrained by industry, geography, or culture. Despite well-intentioned regulatory initiatives and laws such as Sarbanes-Oxley in the United States, fraudulent activities continue and have even evolved in complexity. This paper reviews both domestic and international fraud cases to serve as a catalyst for change via blockchain technology. Accordingly, this paper develops and presents conceptual designs for blockchain implementations aimed at reducing the three distinct types of corporate fraud: asset misappropriation, financial statement manipulation and corruption. The proposed conceptual framework consists of five different levels of implementation with specific examples for each level. This research is part of a limited but growing attempt to propose blockchain designs to prevent or reduce moral hazard within a corporate setting.
Journal of Financial Crime, 0187, 09, 2020
Financial fraud is not bounded or constrained by industry, geography, or culture. Despite well-intentioned regulatory initiatives and laws such as Sarbanes-Oxley in the United States, fraudulent activities continue and have even evolved in complexity. This paper reviews both domestic and international fraud cases to serve as a catalyst for change via blockchain technology. Accordingly, this paper develops and presents conceptual designs for blockchain implementations aimed at reducing the three distinct types of corporate fraud: asset misappropriation, financial statement manipulation and corruption. The proposed conceptual framework consists of five different levels of implementation with specific examples for each level. This research is part of a limited but growing attempt to propose blockchain designs to prevent or reduce moral hazard within a corporate setting.
Nonlinearities and financial contagion in Latin American stock markets (with Claudio Bonilla, Rafael Romero-Meza and Apóstolos Serletis)
Economic Modelling, 51, 653-656, 2015
We use the Hinich (1996) portmanteau bicorrelation test to graphically represent nonlinear events detected in Latin American stock markets. We identify the starting, the ending, the intensity, and the persistence of nonlinear episodes. The six episodes identified in the period studied were found to be contemporaneous with international financial crises, which allows us to speculate that the contagion caused by financial crises induces nonlinear dependencies. We advocate that this test could be complementary to traditional tests employed in the study of financial contagion. We observe systematic nonlinear structure in the stock index return series that have been associated with temporary lack of market efficiency. This new approach can help financial analysts and regulators to assess graphically the state of dependence measured by the bicorrelation test as frequently as new information arrives.
Economic Modelling, 51, 653-656, 2015
We use the Hinich (1996) portmanteau bicorrelation test to graphically represent nonlinear events detected in Latin American stock markets. We identify the starting, the ending, the intensity, and the persistence of nonlinear episodes. The six episodes identified in the period studied were found to be contemporaneous with international financial crises, which allows us to speculate that the contagion caused by financial crises induces nonlinear dependencies. We advocate that this test could be complementary to traditional tests employed in the study of financial contagion. We observe systematic nonlinear structure in the stock index return series that have been associated with temporary lack of market efficiency. This new approach can help financial analysts and regulators to assess graphically the state of dependence measured by the bicorrelation test as frequently as new information arrives.
Book Chapters
Utility Tokens (with Luis Álvaro Abarzúa and Christian Cáceres )
The Emerald Handbook on Cryptoassets (forthcoming)
Utility tokens are digital currencies that serve as the only accepted means of payment for services and products provided through a blockchain-based platform. They finance the development of their product or service, reward and incentivize early adopters and network promoters, align economic incentives between supply, demand, and the marketplace, and enhance network effects among all participants. Their tokenomic design consists of the rules and regulations governing a token’s issuance, distribution, allocation, and potential destruction. The chapter describes utility tokens, compares them with other types of cryptoassets, and discusses their value creation process and role in network economics. It also reviews common tokenomic designs, discusses different regulatory approaches, and provides examples of current utility token applications in decentralized applications such as decentralized finance (DeFi) and virtual reality platforms (metaverses).
The Emerald Handbook on Cryptoassets (forthcoming)
Utility tokens are digital currencies that serve as the only accepted means of payment for services and products provided through a blockchain-based platform. They finance the development of their product or service, reward and incentivize early adopters and network promoters, align economic incentives between supply, demand, and the marketplace, and enhance network effects among all participants. Their tokenomic design consists of the rules and regulations governing a token’s issuance, distribution, allocation, and potential destruction. The chapter describes utility tokens, compares them with other types of cryptoassets, and discusses their value creation process and role in network economics. It also reviews common tokenomic designs, discusses different regulatory approaches, and provides examples of current utility token applications in decentralized applications such as decentralized finance (DeFi) and virtual reality platforms (metaverses).
A Closer Look into Decentralized Finance (DeFi) (with Sebastián Labbé )
The Emerald Handbook on Cryptoassets (forthcoming)
Decentralized finance (DeFi) is a technological infrastructure built on a blockchain networking environment that supplies transparent, uncensorable, and decentralized financial services and products. This infrastructure offers the opportunity to replicate traditional financial instruments on a decentralized platform and incorporate added features provided by blockchain technology. It also allows creating new instruments native to blockchain technology unavailable through traditional financial institutions. This chapter presents an in-depth analysis of the inner workings of stablecoins, decentralized exchanges, automated market makers, liquidity pools, decentralized lending, synthetic instruments, and asset management. It also provides specific examples for each application and presents some current challenges the sector faces.
The Emerald Handbook on Cryptoassets (forthcoming)
Decentralized finance (DeFi) is a technological infrastructure built on a blockchain networking environment that supplies transparent, uncensorable, and decentralized financial services and products. This infrastructure offers the opportunity to replicate traditional financial instruments on a decentralized platform and incorporate added features provided by blockchain technology. It also allows creating new instruments native to blockchain technology unavailable through traditional financial institutions. This chapter presents an in-depth analysis of the inner workings of stablecoins, decentralized exchanges, automated market makers, liquidity pools, decentralized lending, synthetic instruments, and asset management. It also provides specific examples for each application and presents some current challenges the sector faces.
Tokenized Assets and Securities (with Gabriel Rodríguez-Garnica )
The Emerald Handbook on Cryptoassets (forthcoming)
Tokenization is a relatively new activity in digital finance. The standard features and characteristics of assets and securities can be enhanced by tokenization, a process that creates a blockchain representation of the underlying instrument. Asset and security tokenization produces many benefits. These benefits include reducing issuance and trading costs, lessening dependency on intermediaries, facilitating more liquidity in markets, and providing greater transparency around an asset’s lifecycle for all parties involved. This chapter synthesizes the key characteristics, benefits, processes, tools, and techniques of tokenizing real-world assets. It also provides several examples of current asset-backed token applications to help understand the rapidly growing industry and analyzes future expectations of this new technology.
The Emerald Handbook on Cryptoassets (forthcoming)
Tokenization is a relatively new activity in digital finance. The standard features and characteristics of assets and securities can be enhanced by tokenization, a process that creates a blockchain representation of the underlying instrument. Asset and security tokenization produces many benefits. These benefits include reducing issuance and trading costs, lessening dependency on intermediaries, facilitating more liquidity in markets, and providing greater transparency around an asset’s lifecycle for all parties involved. This chapter synthesizes the key characteristics, benefits, processes, tools, and techniques of tokenizing real-world assets. It also provides several examples of current asset-backed token applications to help understand the rapidly growing industry and analyzes future expectations of this new technology.
Trade Settlements (with Ehsan Nikbakht and Giga Zukhubaia )
The Emerald Handbook on Cryptoassets (forthcoming)
The current security trade settlement life cycle presents several inefficiencies derived from intermediaries involved in the transaction between buyers and sellers. This chapter examines distributed ledger technology (DLT) the underlying technology of all blockchain applications, including trade settlements, and reviews the implications of using blockchain in trade settlements for cryptoassets. Emerging blockchain technology provides investors, exchanges, regulators, and countless potential intermediaries with the most up-to-date technology with the highest efficiency, transparency, credibility, and automation enabled by using smart contracts. Smart contracts enable an ecosystem to handle the process of trade settlements starting from execution to clearing and then settlement. These contracts reduce the reconciliation and recordkeeping costs and streamline repetitive processes present in today’s trade settlement system. The chapter highlights the benefits of implementing DLT in today’s financial markets globally in all aspects of trading, including cryptoassets.
The Emerald Handbook on Cryptoassets (forthcoming)
The current security trade settlement life cycle presents several inefficiencies derived from intermediaries involved in the transaction between buyers and sellers. This chapter examines distributed ledger technology (DLT) the underlying technology of all blockchain applications, including trade settlements, and reviews the implications of using blockchain in trade settlements for cryptoassets. Emerging blockchain technology provides investors, exchanges, regulators, and countless potential intermediaries with the most up-to-date technology with the highest efficiency, transparency, credibility, and automation enabled by using smart contracts. Smart contracts enable an ecosystem to handle the process of trade settlements starting from execution to clearing and then settlement. These contracts reduce the reconciliation and recordkeeping costs and streamline repetitive processes present in today’s trade settlement system. The chapter highlights the benefits of implementing DLT in today’s financial markets globally in all aspects of trading, including cryptoassets.
Cryptoassets: An Overview (with H. Kent Baker, Ehsan Nikbakht, and Sean Stein Smith )
The Emerald Handbook on Cryptoassets (forthcoming)
Since bitcoin’s introduction as the first cryptoasset in 2009, this evolving asset class has generated considerable interest and excitement among both academics and practitioners. A cryptoasset is a private digital asset that uses cryptography and serves as a medium of exchange. The most well-known cryptoassets are cryptocurrencies, such as bitcoin, that permit buying goods and services or trading them for a potential profit. However, cryptocurrencies are not like using cash and are not very “money-like.” Thus, cryptoasset owners of view them as investments and expect their value to rise.
Besides cryptocurrencies, other types of cryptoassets include security tokens, utility tokens, stablecoins, and tokenized securities. The price of cryptoassets can be unpredictable and highly volatile, making them risky investments. Some, like bitcoin, are well-known global brands trading on exchanges around the world. Others have a much smaller market presence.
What is sure about cryptoassets is that they are here to stay. CoinMarketCap, a popular data aggregator, reports more than 6,000 different cryptoassets, with new ones created each month. The presence of multiple cryptoassets occurs because their creators optimize the underlying blockchains for various uses. The market capitalization of multiple cryptoassets exceeds $1 trillion. Those involved in cryptoassets include individual investors, major financial institutions, endowments, and hedge funds.
Cryptoassets, especially more prominent cryptocurrencies such as bitcoin, are attractive to investors because of potentially high returns. However, increased volatility accompanies high returns. Another potential benefit of including bitcoin in an investment portfolio is its low correlations with traditional assets such as stocks and bonds. Thus, including bitcoin in a portfolio offers diversification benefits. Over time, however, bitcoin’s low correlations with other asset classes are likely to rise. Bitcoin is currently an early-stage investment opportunity, and its core drivers differ from those of other assets. Despite the investment opportunities offered by bitcoin and other cryptoassets, investors entering this market face substantial challenges, including low quality of information, a lack of sound or academically defensible valuation models, regulatory uncertainty, and inadequate due diligence.
The Emerald Handbook on Cryptoassets (forthcoming)
Since bitcoin’s introduction as the first cryptoasset in 2009, this evolving asset class has generated considerable interest and excitement among both academics and practitioners. A cryptoasset is a private digital asset that uses cryptography and serves as a medium of exchange. The most well-known cryptoassets are cryptocurrencies, such as bitcoin, that permit buying goods and services or trading them for a potential profit. However, cryptocurrencies are not like using cash and are not very “money-like.” Thus, cryptoasset owners of view them as investments and expect their value to rise.
Besides cryptocurrencies, other types of cryptoassets include security tokens, utility tokens, stablecoins, and tokenized securities. The price of cryptoassets can be unpredictable and highly volatile, making them risky investments. Some, like bitcoin, are well-known global brands trading on exchanges around the world. Others have a much smaller market presence.
What is sure about cryptoassets is that they are here to stay. CoinMarketCap, a popular data aggregator, reports more than 6,000 different cryptoassets, with new ones created each month. The presence of multiple cryptoassets occurs because their creators optimize the underlying blockchains for various uses. The market capitalization of multiple cryptoassets exceeds $1 trillion. Those involved in cryptoassets include individual investors, major financial institutions, endowments, and hedge funds.
Cryptoassets, especially more prominent cryptocurrencies such as bitcoin, are attractive to investors because of potentially high returns. However, increased volatility accompanies high returns. Another potential benefit of including bitcoin in an investment portfolio is its low correlations with traditional assets such as stocks and bonds. Thus, including bitcoin in a portfolio offers diversification benefits. Over time, however, bitcoin’s low correlations with other asset classes are likely to rise. Bitcoin is currently an early-stage investment opportunity, and its core drivers differ from those of other assets. Despite the investment opportunities offered by bitcoin and other cryptoassets, investors entering this market face substantial challenges, including low quality of information, a lack of sound or academically defensible valuation models, regulatory uncertainty, and inadequate due diligence.
Blockchain Trading and Exchange (with Steve McKeon, and Cameron Pfiffer)
The Palgrave Handbook of Technological Finance (2021)
The term “blockchain trading” encompasses a wide variety of market activity ranging from spot markets for cryptocurrency, to back end infrastructure on traditional asset exchanges. As highlighted in this chapter, the spectrum of trading venues, asset types, and service providers is vast. Additionally, new applications are arriving even beyond those that we address, such as the market for energy trading. We review the extant literature on various benefits and challenges to widespread adoption of blockchains in trading and exchange, but note that there will be numerous avenues for future research by financial scholars as these systems continue to develop and evolve.
The Palgrave Handbook of Technological Finance (2021)
The term “blockchain trading” encompasses a wide variety of market activity ranging from spot markets for cryptocurrency, to back end infrastructure on traditional asset exchanges. As highlighted in this chapter, the spectrum of trading venues, asset types, and service providers is vast. Additionally, new applications are arriving even beyond those that we address, such as the market for energy trading. We review the extant literature on various benefits and challenges to widespread adoption of blockchains in trading and exchange, but note that there will be numerous avenues for future research by financial scholars as these systems continue to develop and evolve.
Public Blockchains and Applications
The Emerald Handbook of Blockchain for Business (2021)
Public blockchains are permissionless blockchains, allowing universal access to read, write, and validate information stored in the network. This permissionless
nature also implies the intentional absence of a central coordinating authority. Instead, the coordination of users and management of the blockchain is
embedded in the software protocol and complemented by incentive mechanisms,together commonly referred to as cryptoeconomics.
Some common features of public blockchains are decentralization, censorship resistance, tamper resistance, transparency, and anonymity. All of these features have a high probability of attainment, but none are guaranteed, as they depend on the correct coding and functioning of the blockchain protocol, cryptoeconomic design, behavior of all blockchain participants, and external factors that cannot be encompassed in the contracts.
Foreseeing a universal, one-size-fits-all blockchain protocol, whether it is a public, private, or hybrid, is difficult to imagine. What is more realistic, and in line
with the evolution observed in the market, is the specialization and customization of blockchain protocols to the specific needs of certain types of data and use cases, additional protocols allowing the interoperability of blockchains, and the development of applications and interfaces that operate on top of blockchains. Lastly,developments are likely to allow blockchains to permeate and eventually disrupt brick and mortar businesses and institutions, much like the internet disrupted traditional business.
The Emerald Handbook of Blockchain for Business (2021)
Public blockchains are permissionless blockchains, allowing universal access to read, write, and validate information stored in the network. This permissionless
nature also implies the intentional absence of a central coordinating authority. Instead, the coordination of users and management of the blockchain is
embedded in the software protocol and complemented by incentive mechanisms,together commonly referred to as cryptoeconomics.
Some common features of public blockchains are decentralization, censorship resistance, tamper resistance, transparency, and anonymity. All of these features have a high probability of attainment, but none are guaranteed, as they depend on the correct coding and functioning of the blockchain protocol, cryptoeconomic design, behavior of all blockchain participants, and external factors that cannot be encompassed in the contracts.
Foreseeing a universal, one-size-fits-all blockchain protocol, whether it is a public, private, or hybrid, is difficult to imagine. What is more realistic, and in line
with the evolution observed in the market, is the specialization and customization of blockchain protocols to the specific needs of certain types of data and use cases, additional protocols allowing the interoperability of blockchains, and the development of applications and interfaces that operate on top of blockchains. Lastly,developments are likely to allow blockchains to permeate and eventually disrupt brick and mortar businesses and institutions, much like the internet disrupted traditional business.
Working papers
An Examination of Stablecoin Reporting, Economic Impact & Policy Forecasts (with Sean Stein Smith)
This research paper examines and puts forward an objective analysis of one of the fastest-growing sectors of the cryptoasset space; stablecoins. Since being introduced to the broader marketplace following the initial bitcoin and ICO bubble this subset of the cryptoasset class has rapidly grown to be worth in excess of $100 billion. In the face of this rapid growth, however, the reporting and compliance requirements for this space have struggled to keep pace. The goals of this research are twofold. Firstly, it reviews and analyzes the current state of the stablecoin marketplace and ecosystem, including a review of regulatory actions and headline-generating failures. Secondly, it puts forward and establishes a framework and guiding rules for how stablecoins are treated, regulated, and utilized moving forward. Practitioners and researchers alike will be able to glean insights from this research and construct actionable business plans as a result.
This research paper examines and puts forward an objective analysis of one of the fastest-growing sectors of the cryptoasset space; stablecoins. Since being introduced to the broader marketplace following the initial bitcoin and ICO bubble this subset of the cryptoasset class has rapidly grown to be worth in excess of $100 billion. In the face of this rapid growth, however, the reporting and compliance requirements for this space have struggled to keep pace. The goals of this research are twofold. Firstly, it reviews and analyzes the current state of the stablecoin marketplace and ecosystem, including a review of regulatory actions and headline-generating failures. Secondly, it puts forward and establishes a framework and guiding rules for how stablecoins are treated, regulated, and utilized moving forward. Practitioners and researchers alike will be able to glean insights from this research and construct actionable business plans as a result.
Industry publications
Tokenized Securities and Commercial Real Estate (with Julie Smith, Manasi Vora, Kenta Yoshida and Zev Vogel)
The following research investigates the application of security tokenization to commercial real estate assets. Primary research through interviews was conducted to uncover some of the most salient use cases and blockchain benefits for the space. The report explores three domains of blockchain application to real estate: (1) the application of blockchain to securities issuance and trading, (2) the application of blockchain to the real estate investment value chain, and (3) the application of blockchain to the representation of the physical assets themselves. Overall, we find that the value creation provided by tokenization can come in several layers, with some standalone benefits emerging by applying tokenization to each of the three domains in isolation. However, significant synergies can arise from combining these layers. As integration increases, additional features become possible. Our conclusion offers a general framework that can be used to perform future research on the tokenization of other types of assets and their related securities.
The following research investigates the application of security tokenization to commercial real estate assets. Primary research through interviews was conducted to uncover some of the most salient use cases and blockchain benefits for the space. The report explores three domains of blockchain application to real estate: (1) the application of blockchain to securities issuance and trading, (2) the application of blockchain to the real estate investment value chain, and (3) the application of blockchain to the representation of the physical assets themselves. Overall, we find that the value creation provided by tokenization can come in several layers, with some standalone benefits emerging by applying tokenization to each of the three domains in isolation. However, significant synergies can arise from combining these layers. As integration increases, additional features become possible. Our conclusion offers a general framework that can be used to perform future research on the tokenization of other types of assets and their related securities.
Financial Applications of Blockchain (with H. Kent Baker, Ehsan Nikbakht, Sean Stein Smith, and Andrew C. Spieler)
Blockchain is a growing technology that started in the cryptocurrency sphere with bitcoin but expanded to many business fields and beyond. In contrast to a traditional database, blockchain extensively uses cryptography (i.e., writing security codes) and permanently maintains the data. Although many industries worldwide use blockchain for various purposes, we discuss financial applications in the financial services, real estate, and accounting and auditing sectors.
Blockchain is a growing technology that started in the cryptocurrency sphere with bitcoin but expanded to many business fields and beyond. In contrast to a traditional database, blockchain extensively uses cryptography (i.e., writing security codes) and permanently maintains the data. Although many industries worldwide use blockchain for various purposes, we discuss financial applications in the financial services, real estate, and accounting and auditing sectors.