Fake Tesla, Apple, Amazon Stocks Are Trading on Blockchains

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If you’ve seen synthetic versions of Apple, Tesla or Amazon stock trading on a blockchain, don’t go throwing your money their way. They’re not what you think.

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As Bloomberg reported on Tuesday, the synthetic versions of Tesla, Apple, Amazon and other leading stocks — along with a few popular exchange-traded funds — have been created by the projects Mirror Protocol and Synthetix over the past year.

The tokens and programs that allow them to trade are engineered to reflect the prices of the securities they track, only without any actual purchases or sales of the real stocks and ETFs involved. Volumes are microscopic compared to the trading volume on regulated exchanges, but they’ve stirred plenty of interest and excitement from the cryptocurrency community.

As Bloomberg noted, Wall Street has spent years mulling whether it would be feasible to move the stock market onto a blockchain. But innovators in decentralized finance, aka DeFi, are already building synthetic versions of some of the world’s leading stocks. These are similar to other synthetic assets such as digital artwork.

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One DeFi advocate is Do Kwan, cofounder and CEO of South Korea’s Terraform Labs, which created the Mirror Protocol on its Terra blockchain. In an email to Bloomberg, Kwon said DeFi “is so powerful in unlocking financial services for disenfranchised people around the world,” adding that, “It’s better to move fast and break things. Waiting for fragmented regulatory frameworks to crystallize before innovating is counterintuitive.”

Synthetic stock tokens trade on decentralized and automated markets such as Uniswap and Terraswap, which let users buy and sell the assets directly on the blockchain. This makes them different from the kinds of centralized crypto exchanges operated by Coinbase Global and Binance.

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For now, synthetic stocks and other assets occupy a small slice of the overall crypto market, which has been one of the biggest investing stories of the year. As previously reported on GOBankingRates, new crypto coins have flooded the market and helped create millionaires who have seen their coins’ values increase by 2,000% and more.

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But prices of Bitcoin, Ethereum and other cryptocurrencies have crashed of late amid an effort by Chinese regulators to crack down on Bitcoin mining and trading.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.
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