News about another big enterprise adopting this technology is now a common occurrence. The biggest global banks are racing to be the first ones to implement this tech. And the acceptance of Bitcoin is now a global phenomenon.
As my attention is always fixated on the way blockchain will evolve outdated capital markets, I want to draw your attention to space.
Blockchain and space are seemingly unrelated at first glance, but stay with me and the connection will be clarified. As a senior advisor of SpaceFund, I am often asked about the application of blockchain tech and the space industry.
There are obvious solutions that this tech can provide, such as improved supply chains to ensure the integrity of parts to minimise faulty products, payment systems between in-space service providers for direct value transfers, and eventual consensus-based governance methods to allow space settlements.
However, I would like to bring your attention today to space as an asset class and explain how its establishment is necessary for the new generation’s global market place.
I have written and spoken a lot about the need for a global marketplace that connects investors with enterprises all over the world.
In today’s world, capital markets are geographically segregated and the idea of small cap companies is basically dead. And it is understandable.
The technology that we used to build exchanges as an enterprise is extremely outdated. It was built on the assumption that stocks have to be sold. There was a strong belief that nobody wants to buy stocks, they MUST be aggressively sold.
However, the 2017 ICO boom proved that assumption wrong. One of the biggest points of interest we can take from this is that global investors do have a huge appetite for deal-flow and are willing to do their own research and make their own independent investment decisions.
And it was all finally possible because of blockchain and new communication methods. Blockchain allowed for the inexpensive, immutable transfer of value while communication methods allowed for the fast and inexpensive transfer of information.
So, now we have the tech to build a global securities exchange and allow the public offering of small market capitalisation companies to be listed for a fraction of what it costs now (a small market cap company is anywhere between $20m-$2bn).
But there is a tiny problem which gets bigger the closer we observe it.
Due to the segregation of markets, costs of listing, and regulation, IPOs are now completely broken. People are not eagerly running to invest in public offerings and companies valued under $2bn are not going public.
In all minds, IPOs are like old fairy tales where you can invest in a stock like Microsoft and become a wealthy person. Nowadays, IPOs are a joke, and recent fiascos surrounding attempts to go public are simply embarrassing. Just look at WeWork.
It does not have to be this way, and it’s time for things to change. With tech under our wings, we can reignite the interest in public offerings. For that, we need a golden key.
Wait. What does all this have to do with space?
Space is a globally relatable industry. If you ask anyone in the world if they know what a satellite is, they will know what it is. People get excited when they talk about space.
In addition to relatability and excitement, it is also an industry that is screaming for liquidity. The space industry is very interesting because it is a 70-year-old industry that has existed as a free enterprise for about 10 years.
A lot of money has been going in and not much money is coming out. This cannot continue for a long time, and without liquidity it is bound to dramatically underperform.
Liquidity, relatability, and money is the triple golden key.
Using blockchain technology, we can allow space companies to go public and bring much-needed liquidity to the industry.
I believe that it is space as an asset class that will reignite the spark and connection between global investors and companies. It will lead other industries by example and revamp the trust and excitement of going public for many enterprises.
It will allow us to go back to the moon and explore beyond.
Irina S Litchfield
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.