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DSTOQ bridges the gap between real world assets and cryptocurrency

Tony Zerucha

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DSTOQ is the perfect vehicle for both retail and institutional investors wanting to invest in real world assets with cryptocurrencies, co-founder Craig McGregor said. A licensed stock exchange, DSTOQ enables peer to peer trading of tokenized securities such as equities, bonds, stocks, oil and gold through the DSQ token.

Mr. McGregor said he has personally been involved with cryptocurrency for five years, mostly on the personal level. Now that the industry has matured, the time is right to get involved and security tokens are the perfect vehicle.

“It gives you the ability to have all the benefits of the blockchain when it comes to speed and the ability to move wealth around peer to peer, but you also have assets backed by something real,” he explained.

The South African’s own experience with international investing helped drive him to co-found DSTOQ. When he’d invest abroad the forex and various other intermediary fees could eat up to 10 per cent of his investment.

“That’s an outrageous amount of fees when it comes to paying to invest abroad,” Mr. Mc Gregor said, adding total fees on DSTOQ are between one quarter and one half of one per cent.

Craig McGregor

A licensed stock exchange, DSTOQ is a good use case for cryptocurrency, Mr. McGregor explained. They have strong user volume, revenue and profit. They also solve a real world problem and that is providing people around the world with the ability to invest through a technology that efficiently and inexpensively empowers the transfer of funds via a decentralized, mobile first exchange with a strong emphasis on user experience.

“With that combination we can drive mass adoption because there’s a clear value add,” Mr. Mc Gregor said.

That’s a welcome contrast to many of the projects pitched in these the early years of the blockchain industry. In what should be a recognizable pattern to seasoned fintech followers, some early initiatives are developed more by technologists than entrepreneurs. While interesting concepts, they can be solutions in search of problems, ones without clear business models.

It’s a pattern identified by David Holtzman, a DSTOQ technical advisor, Mr. McGregor said. A former CTO at Network Solutions and chief scientist for IBM, Mr. Holtzman now works with global blockchain companies. In the early 2000s he saw many technologies in search of a problem before a second wave of companies reversed that process and became much more sustainable overall.

Every week I receive a few messages about cryptocurrency exchanges in the development stage. Not all will come to fruition, but enough will progress raise questions about who will win the war of attrition and consolidation. Mr. McGregor said several factors have DSTOQ positioned well for the long term.

They are licensed, so they can actually accept cryptocurrency and create and transact in security tokens. Medium term the focus is on providing extreme value to a retail customer base in addition to institutions.

“We’re not just looking at large institutions, but individuals are where our value proposition is,” Mr. McGregor explained. “We’re a global platform with low fees and the ability to hedge.”

The lack of retail access to these markets is an especially acute issue in emerging regions, he added. Cryptocurrency holders in many DSTOQ target markets are desperately seeking ways to hedge their cryptocurrency assets with few options other than stablecoins often backed by little more than promises, Mr. McGregor said. During market declines 60 per cent of the Bitcoin volume is represented by stablecoins.

“They’re a passive asset with no return,” Mr. McGregor said. “Security tokens are far superior solutions and can be used for hedging purposes and backed by real assets.”

A few emerging markets have precise dynamics that should attract retail investors to DSTOQ, Mr. McGregor said. A young population emerging into the middle class but living with high inflation and some capital controls. Think Turkey, Venezuela, Argentina, South Africa, the Philippines and Taiwan.

Another factor in DSTOQ’s favor is it is built on the Stellar protocol, Mr. McGregor said. The technology is scalable and can handle 1,000 transactions per second, settling them in three seconds on average.

“It’s a good starting point for us,” Mr. McGregor said. “They have a blockchain that is in place and running.”

Plus, because the customer controls the private keys, so while that results in less throughput it comes with significant security benefits, Mr. McGregor explained.

“If we’re hacked we won’t lose funds because we never held them.”

DSTOQ plans to launch a closed beta by the end of this tear, Mr. McGregor said.

 

Tony Zerucha

Tony Zerucha is an alternative finance journalist with more than seven years experience in the space. The author of more than 1,000 articles, Tony was named LendIt's 2018 Journalist of the Year.

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