The problem
In addition to the incumbent regulation associated with Securities, as a retail investor/businesses perspective, several inefficiencies can be improved:
The average investor usually transfers his/her savings to an intermediary (asset manager, broker, etc.) who will advise and/or arrange investments. The investor’s portfolio is subject to bias and thus may invest in a portfolio which may not be appropriate.
Investing in traditional equity markets is a complex process where a limited group of experts dominate the market, making it extremely risky for retail investors. Retail investors generally have access to markets provided you reside in a developed economy which allows market access.
Other illiquid asset classes such as real estate, renewable energy, transportation & infrastructure, hospitality, fine wine and art, and early-stage technology investing are not easily accessible to retail investors and small businesses without having the nominal value of the underlying asset ready to deploy.
These types of markets are rigid and illiquid: one buyer, one seller.
Investors who keep their savings in bank accounts typically see the value of their savings diminished due to aggressive monetary policies and inflation, which results in large scale devaluation and debasement of currencies due to widespread, unhindered monetary stimulus. The combination of these factors equates to lower purchase power of the currencies over time. Furthermore, deposits stored in bank accounts currently provide close to 0% interest in most developed countries and in many, negative interest. In addition to this, banking fees and inflation erode bank deposits over time.
Decision making, governance, and communication channels in non-digital entities generate inefficiencies that lead to losses due to higher costs derived from physical presence, storage, mail delivery, etc. All these expenses are avoided through digitalization.
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