"Tokenized" Stocks Are Breaking Down Barriers. Here's What Investors Need to Know.

Modern stock trading still runs on systems that were designed when every phone had a cord

The brokerage is letting people buy crypto tokens that represent s of Apple, Tesla, or even, and it could potentially launch this feature in the U

Market soon (fascinating analysis)

Moreover, Conversely, The mise is 24/7 trading, near‑instant transaction settlement, and the ability to buy stocks directly using crypto (noteworthy indeed), in light of current trends

That mise matters because the next wave of capital to enter crypto is ly to arrive through inflows to familiar tickers

Here's what you need to know this trend, and how to take advantage of it with your, in this volatile climate

Tokenized assets are going main Think of a tokenized stock as a crypto token that can (but does not always) confer ownership of the underlying stock

Ideally, a company issues a token while it holds s of the stock that's being tokenized (quite telling), in light of current trends

The investor buys the token from them, and then, in theory, holders of the token can redeem it for s of the stock if they choose to do so (which is quite significant)

The price of the token is tightly coupled to the price of the underlying stock, as the token is exchangeable for it, amid market uncertainty

Another, far less desirable, implementation of the tokenization idea is a token that is artificially configured to mirror the price action of the underlying asset, without the token issuer actually owning any s at all

Nevertheless, Typically, the tokens are set to mirror the performance of the s of

However, These companies do not have stocks that are traded in highly liquid those for public companies, and some of them are nically not allowed to be traded without permission of the stock's issuer, considering recent developments

Additionally, Image source: Getty Images, considering recent developments

In such a situation, token issuers are viding a financial duct that's totally unmoored from the actual value of the asset, so there's nothing to stop holders from getting burned

Of course, it's still possible to sell such tokens to a greater fool, but they are in no way investment-grade, and you should not buy them

For its part, Robinhood says it will back its public company tokens with real equity (this bears monitoring)

But its OpenAI and SpaceX tokens rely solely on Robinhood's own hedging desk, meaning holders have no claim on the underlying es if things go sideways

In other words, Robinhood issues the less desirable and uninvestible type of tokenized stock, as well as tokenized s backed by its own holdings, given the current landscape

But why bother with tokenization of stocks in general, in this volatile climate

In short, convenience

Traditional equity trades in the U, in light of current trends

Furthermore, Settle the next day, they may incur fees, and the market shuts down for nights and weekends (quite telling), in today's market environment

A blockchain can close a tokenized trade in seconds for less than a penny, and it never sleeps (something worth watching)

Robinhood is betting that this lining and wider trading window will win it new customers

Furthermore, Furthermore, The upside could be massive for investors who position carefully in advance of this trend

On the other hand, One chain could be the biggest beneficiary here Enter Solana, (SOL -6 (which is quite significant)

Those attributes matter for its spects as a for tokenized stock trading

For now, Solana's combination of throughput and cost gives it a first-mover advantage in tokenized stocks

If the segment s the broader tokenization roadmap, capital will chase liquidity, reinforcing that lead

Furthermore, Regulation could hobble the segment, or a faster competitor could emerge, so size your positions accordingly, in this volatile climate

Investors interested in the tokenization wave thus have two main options

One is to buy Robinhood and hope the brokerage scales the gram without angering regulators, and that its dalliance with issuing tokenized stocks of ends before there's serious fallout

The better option is to own a sr of the tokenization rails via an investment in Solana or another chain that's going to be a hub for tokenized equity trading, in today's market environment

Moreover, On the other hand, If tokenized equities graduate from curiosity to main channels, early exposure to Solana could look wise

In contrast, Since it's a blockchain system rather than a company, multiple tokenized stock issuers could operate on Solana's network

In contrast, That means that the regulatory risk to the network as a whole is much lower than an investment in Robinhood, in today's financial world

Furthermore, Robinhood's investments in tokenization could still bring investors significant wealth, but so far, it simply doesn't seem to be tecting investors or educating them perly in light of its apach to issuing tokens

This tells us that Author Alex Carchidi is a contributing Healthcare and Cryptocurrency Analyst at The Motley Fool, covering publicly traded companies and investments in the bio, pharma, cannabis, and digital asset industries

Prior to The Motley Fool, Alex was a bench scientist and later a science writer at several biopharma companies, and started his career as a reer at the Ragon Institute of MGH, MIT, and Harvard

On the other hand, He holds a B, in today's market environment

In Biology and a B, amid market uncertainty

In Philosophy from Boston University, and an MBA with a concentration in Finance from the Isenberg School of at the University of Massachusetts, Amherst (this bears monitoring)

In his spare time, Alex enjoys traveling in Latin America and exploring the food scene of Greater Boston

Conversely, TMFacarchidi X @alexcarchidi Alex Carchidi has positions in Apple, Solana, and Tesla

Moreover, What the data shows is Motley Fool has positions in and recommends Apple, Solana, and Tesla

However, The Motley Fool has a disclosure policy.