Note: this post is not investment advice and is for educational purposes only. Caveat emptor!
Settlement is a complicated subject, but when it comes to preserving your wealth it’s a critical topic—what do you own, really? Are most of your financial assets actually IOUs? This whole discussion boils down to one simple fact: the legacy settlement system embraces unsettled trades and imprecise ledgers, while the crypto settlement system does not. “Crossing the streams” between legacy and crypto will pose some of the biggest operational challenges that have ever existed in financial services. No one should be under any illusion that the two systems can be seamlessly melded together. Caveat emptor for all crypto/legacy hybrids. Do your homework. Read the fine print!
The legacy system’s embrace of fault tolerance to band-aid its myriad problems may sound good at first blush, but that’s exactly what makes the financial system unstable and unfair. If we could start over from scratch, I believe we’d adopt a purely crypto-based financial system—because as a settlement system, it is far superior. It’s an honest ledger. As more folks learn about this, as more institutional investors invest in this, and as more issuers issue security tokens and other natively-blockchain assets, the end-run around the legacy settlement system will accelerate.
All this innovation is worth celebrating!
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