Fintech happens to be one of my favorite industries because there are few others that work so consistently towards progress. The notion of money has changed so drastically over millennia and arguably even more so during the last few decades alone. There are countless influential names that are working daily to redefine how we think about finance, and I was recently lucky enough to sit down with one of them. Jim Preissler, CEO of Trade.io, discussed with me the idea of blockchain and Wall Street’s growing involvement in it.
Jim is a veteran of Wall Street, having worked there for over a decade before founding Trade.io. From him, I learned a great deal about how much blockchain needs to fit its square peg into the round hole created by the current industry.
You Can’t Put A Label On Wall Street
Wall Street is too big to define. There are mutual funds, hedge funds, investment firms, market makers, trading firms and fintech startups. When transformational technologies like blockchain come around, they threaten to disrupt the market and the profits that each of these parties receives.
As far as institutional implications go, Jim explains, “First, let me say that the spirit of the crypto movement is not about recreating the same rigged game ... it’s about taking away the wealth and power from centralized authority and redistributing it to the masses. That is why some firms could possibly struggle with the implementation.”
Distributed technology such as blockchain has many applications in financial industries, and Jim believes that regardless of their stake in the status quo, widespread adoption will be achieved whether by choice or force. Due to its distributed nature and a potential loss of control that blockchain represents to centralized authorities, it is likely that the many sectors of Wall Street will adopt blockchain at a fluctuating pace.
Including Wolves In The Flock
Despite drastically different motivations between the blockchain community and Wall Street, Jim sees these separate incentives merging out of necessity.
“One thing that technology cannot so easily replace is the knowledge and experience that people in the industry possess. While some implementation of blockchain may go unregulated, it is clear that increasing regulation is coming -- which is a good thing in some segments. Those segments include areas that involve investor protection and the associated compliance with regulation with that regard. Secondly, the knowledge of and familiarity with processes, infrastructure and systems is needed not only to implement the blockchain equivalents but also where the models can be changed for the better using new technology,” he says.
Forward-thinking Wall Streeters coupled with transformational technologists sounds like a powerful advocate for change. However, they will need a platform to rally around, or even the worst paradigms won’t change.
Providing Irrefutable Proof
It was hard for Jim to leave Wall Street but necessary for him to begin thinking deeply about real solutions to its many problems. His experience in both larger bulge brackets and smaller organizations provided an invaluable learning experience where he could see both the good and the bad, as well as where things worked and where there was room for change and improvement. What resulted was a company called Trade.io.
“At Trade.io, we are looking to commoditize, disintermediate and disrupt some of the inefficient models that exist in finance," Jim explains. "We’re not just about distributed technology but about distributed wealth. Blockchain technology allows us to achieve the vision of distributed wealth and democratized platforms through our peer-to-peer shared liquidity pool as well as removing much of the inefficiency in fundraising and IPOs.”
Based on user adoption rates and acceptance, Jim saw that the timing was right for blockchain technology to be deployed widely enough to disrupt the financial industry. Blockchain came on the scene almost as if from the heavens and it does most of the legwork in Jim’s Trade.io platform.
Controlled Disruption
Blockchain brings a lot to the table, yet it’s surprisingly simple in its operation. This is the reason why many companies, even those outside of finance, are using it to run their businesses. In Trade.io specifically, Jim says, “Decentralization can help us lower overhead costs, improve transactional and web security and reduce fees. More importantly, smart contracts let us create new assets. Blockchain also lets us handle transactions and portfolios with any currency we want and anywhere we want. I think another underrated benefit of working on blockchain is that the democratic nature makes our stakeholder structure more mutually beneficial, making the system not about what you have but how you can offer it.”
He’s right. With the ability of cryptocurrency and blockchain to digitize value, the ability to invest and speculate on something is novel, and nothing more. Bitcoin survives on faith alone because the technology is no longer anything special. In contrast, blockchain is now where the power is. Recently, however, there have been attempts to control its dissemination. Some have questioned that, if blockchain makes it possible to escape borders and centralized authority, then how can bans like the one in China do so much damage?
Jim answers, “It’s an interesting problem, and the honest answer is it is quite difficult to impose total restrictions on this type of technology. Those that want to circumvent the system will always find a way. That said, regulation and compliance is coming industry-wide, and it will be healthy for the industry so that quality standards can be enforced, illegal activities can be minimized and participants can be protected."
As far as blockchain and the crypto movement go, the cat is out of the bag, and it is never going back in. Governments, central banks, corporations and many other institutions need to figure out and agree on how to deal with it, but a familiar forum like the one being built by Jim and his team will help all parties find common ground.
