Fake Apple stocks are starting to trade on various blockchain platforms

Posted:
in General Discussion
Synthetic versions of popular technology stocks like Apple, Tesla, and Amazon have started trading on blockchains, joining a growing pool of various crypto assets.

Credit: AppleInsider
Credit: AppleInsider


The digital assets are engineered to reflect the prices of the stocks that they reflect, but no actual trading of real stocks is involved. Although sales volumes are still just a tiny percentage of trades on actual exchanges, crypto enthusiasts are excited about the potential. For proponents, it's a way to trade stock-like assets without any of the restrictions.

According to Fortune, the tokens, created by projects like Mirror Protocol and Synthetix, are trading on decentralized and automated markets like Uniswap and Terraswap.

Unlike traditional stocks, the synthetic assets manage to avoid all of the rules and barriers of the regulated financial world. Proponents call that a feature, rather than a bug. The way the fake stocks work is complicated, but they're essentially designed to mirror the prices of the real securities. There are incentives for traders to mitigate price discrepancies, such as the ability to create new tokens when prices are too high or destroy tokens when they're low.

Traders can exchange the synthetic stocks anonymously, 24 hours a day, and without restrictions like "know your client" rules or capital controls.

As mentioned earlier, the actual trading volume of the tokens is still very low. Mirrored Apple stocks, for example, have a market capitalization of about $34 million. Apple's actual NASDAQ market valuation stands at about $2.3 trillion.

The tokens join a growing number of digital assets that leverage the blockchain, the underlying technology behind cryptocurrencies like Bitcoin. Other popular digital goods include non-fungible tokens (NFTs), which is a type of blockchain-powered asset that records ownership of digital goods.

The market for crypto assets is booming, as well. Back in June, an NFT of the original source code for the World Wide Web sold at auction for $5.4 million.

Of course, unregulated finance options like the synthetic tokens could soon draw the attention of enforcement agencies like the Securities and Exchange Commission. Billionaire crypto investor Mike Novogratz, for example, recently said that decentralized finance companies should start abiding by some rules soon to avoid the ire of regulators.

"Invest in a compliance layer now or pay the piper later," Novogratz wrote. "If we want this ecosystem to grow we need to recognize we need to operate within the rules society sets."

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Comments

  • Reply 1 of 28
    physguyphysguy Posts: 920member
    Yet another pyramid scheme. Selling items with no intrinsic value and depending on the next purchaser to bails you out. 
    mknelsonmike1tokyojimuBeatswatto_cobra
  • Reply 2 of 28
    physguy said:
    Yet another pyramid scheme. Selling items with no intrinsic value and depending on the next purchaser to bails you out. 
    That actually isn't different from actual stock, the value is only what the next buyer will pay. The difference being that APPL has a divided but even that is a guarantee. 
  • Reply 3 of 28
    maltzmaltz Posts: 283member
    For proponents, it's a way to trade stock-like assets without any of the restrictions protections.

    FTFY
    minicoffeewatto_cobra
  • Reply 4 of 28
    mknelsonmknelson Posts: 864member
    physguy said:
    Yet another pyramid scheme. Selling items with no intrinsic value and depending on the next purchaser to bails you out. 
    That actually isn't different from actual stock, the value is only what the next buyer will pay. The difference being that APPL has a divided but even that is a guarantee. 
    It is different - with actual stock you own a percentage of the company and voting rights that come with them. The company can sell stock to raise cash, buy stock back to increase value.
    mike1BeatsMplsPmaltz
  • Reply 5 of 28
    maltzmaltz Posts: 283member
    physguy said:
    Yet another pyramid scheme. Selling items with no intrinsic value and depending on the next purchaser to bails you out. 
    That actually isn't different from actual stock, the value is only what the next buyer will pay. The difference being that APPL has a divided but even that is a guarantee. 

    This VERY different than actual stock - actual stock does indeed have intrinsic value.  When you own stock, you literally own a small piece of that company.  Within the limits of incorporation, that means you own a piece of its assets, a piece of its debt, you might receive a piece of its revenue (dividends), and can even participate in some company decisions by voting your shares.
    mike1aderutterBeatsMplsPFileMakerFeller
  • Reply 6 of 28
    sflocalsflocal Posts: 5,823member
    I can "maybe" understand cryptocurrency, but trading in fake stock sound to me like a scam.  I just can't wrap my head around it.

    Don't get me started on NFTs.
    mike1tokyojimuBeatsmaltzFileMakerFeller
  • Reply 7 of 28
    If the prices are the same - whats the advantage of the digital assets over the real stock?

    I will guess (unless somebody knows) that you may not have to provide "all the money up front" 
  • Reply 8 of 28
    neilmneilm Posts: 917member
    Buying fake stock with fake money.
    Seems appropriate.
    auxioMplsP
  • Reply 9 of 28
    auxioauxio Posts: 2,399member
    neilm said:
    Buying fake stock with fake money.
    Seems appropriate.
    I was just about to say the same thing.  Cryptocurrency is money with no real connection to anything, so I guess cryptostocks not having any real connection to companies is the next step in a world with no basis in reality.
    Beats
  • Reply 10 of 28
    aderutteraderutter Posts: 487member
    It’s not fake stocks though, it’s more like buying an index tracker. It aint stock, fake or otherwise, it’s something different and something I would avoid like the plague. I’ll stick to my AAPLs. 
  • Reply 11 of 28
    DAalsethDAalseth Posts: 1,815member
    OFCOL just how stupid are these people? It’s like putting your retirement fund on a fantasy football league. This era will definitely be known to future historians as the Age of Stupid. 
    Beats
  • Reply 12 of 28
    mystigomystigo Posts: 141member
    aderutter said:
    It’s not fake stocks though, it’s more like buying an index tracker. It aint stock, fake or otherwise, it’s something different and something I would avoid like the plague. I’ll stick to my AAPLs. 
    An "index tracker", in the way I think you mean it, actually buys the stocks. They own part of the companies they are tracking. When I first looked at the headline of the article, I got the impression that this was just an index fund you could buy with crypto currency. But it's not. They are selling literally nothing. It makes no sense.
    edited July 7 FileMakerFeller
  • Reply 13 of 28
    maltz said:
    physguy said:
    Yet another pyramid scheme. Selling items with no intrinsic value and depending on the next purchaser to bails you out. 
    That actually isn't different from actual stock, the value is only what the next buyer will pay. The difference being that APPL has a divided but even that is a guarantee. 

    This VERY different than actual stock - actual stock does indeed have intrinsic value.  When you own stock, you literally own a small piece of that company.  Within the limits of incorporation, that means you own a piece of its assets, a piece of its debt, you might receive a piece of its revenue (dividends), and can even participate in some company decisions by voting your shares.
    Sigh,  You cannot take your share of Apple stock and swing by Apple Park and trade it in for your "small piece" of the company. At the end of the day the value is limited to what another person will pay you for the share. That is it, a share is only worth what someone else thinks it's worth paying for.

    *Edited to strike the snarky comment and to offer an apology to Maltz for being a dick. 
    edited July 7
  • Reply 14 of 28

    mknelson said:
    physguy said:
    Yet another pyramid scheme. Selling items with no intrinsic value and depending on the next purchaser to bails you out. 
    That actually isn't different from actual stock, the value is only what the next buyer will pay. The difference being that APPL has a divided but even that is a guarantee. 
    It is different - with actual stock you own a percentage of the company and voting rights that come with them. The company can sell stock to raise cash, buy stock back to increase value.
    As mentioned before, I can't take my APPL share and go trade it for my part of the company. The only thing I can do with it is sell it for what someone else is willing to pay. That sets the value. And while a company can sell stock to raise money or buy stock back in an attempt to raise the value, the value will always be set by what a buyer wants to pay. This is why stocks go up and down, the value changes based on peoples perception of worth not because of an inherent value. 
  • Reply 15 of 28
    DAalsethDAalseth Posts: 1,815member
    maltz said:
    physguy said:
    Yet another pyramid scheme. Selling items with no intrinsic value and depending on the next purchaser to bails you out. 
    That actually isn't different from actual stock, the value is only what the next buyer will pay. The difference being that APPL has a divided but even that is a guarantee. 

    This VERY different than actual stock - actual stock does indeed have intrinsic value.  When you own stock, you literally own a small piece of that company.  Within the limits of incorporation, that means you own a piece of its assets, a piece of its debt, you might receive a piece of its revenue (dividends), and can even participate in some company decisions by voting your shares.
    Sigh, you cannot take your share of Apple stock and swing by Apple Park and trade it in for your "small piece" of the company. At the end of the day the value is limited to what another person will pay you for the share. That is it, a share is only worth what someone else thinks it's worth paying for.
    No you can’t because the stock IS part of the company. that’s what they mean when they say you own part of the company. You can take it to Apple Park and they will buy it from you for money, but no they won’t give you a piece of the sidewalk. You already own that. The stock certificate is proof that you do. And it is worth what someone, or Apple is willing to pay for it, but you also get, as mentioned above, dividends and voting rights into the running of the company. You get that because you own a share of, part of, the company.
    martinxyzmaltz
  • Reply 16 of 28
    auxioauxio Posts: 2,399member
    maltz said:
    physguy said:
    Yet another pyramid scheme. Selling items with no intrinsic value and depending on the next purchaser to bails you out. 
    That actually isn't different from actual stock, the value is only what the next buyer will pay. The difference being that APPL has a divided but even that is a guarantee. 

    This VERY different than actual stock - actual stock does indeed have intrinsic value.  When you own stock, you literally own a small piece of that company.  Within the limits of incorporation, that means you own a piece of its assets, a piece of its debt, you might receive a piece of its revenue (dividends), and can even participate in some company decisions by voting your shares.
    Sigh, you cannot take your share of Apple stock and swing by Apple Park and trade it in for your "small piece" of the company. At the end of the day the value is limited to what another person will pay you for the share. That is it, a share is only worth what someone else thinks it's worth paying for.
    I mean, we can break things down to the philosophical level here if you want.  After all, what's the definition of "value"?  One could say that, unless something can help sustain your existence, it doesn't really have any value.  Everything else in life is simply something to be traded for something else, and the "value" is determined at the point of that trade.

    But regardless, there are things which have a connection to real world objects, and things which don't.  In the case of stock, it has a connection to everything which makes up a company.  In the case of money, it has a connection to the region of the world from which it originated.  In the case of purely digital assets like cryptocurrency, there is no such connection.

    martinxyzFileMakerFellermaltz
  • Reply 17 of 28
    The way the fake stocks work is complicated

    Hahaha. Complicated all the way down to zero value. Then it's simple again.

  • Reply 18 of 28
    Happy_Noodle_Boy said:
    Sigh, you cannot take your share of Apple stock and swing by Apple Park and trade it in for your "small piece" of the company. At the end of the day the value is limited to what another person will pay you for the share. That is it, a share is only worth what someone else thinks it's worth paying for.

  • Reply 19 of 28
    auxio said:
    maltz said:
    physguy said:
    Yet another pyramid scheme. Selling items with no intrinsic value and depending on the next purchaser to bails you out. 
    That actually isn't different from actual stock, the value is only what the next buyer will pay. The difference being that APPL has a divided but even that is a guarantee. 

    This VERY different than actual stock - actual stock does indeed have intrinsic value.  When you own stock, you literally own a small piece of that company.  Within the limits of incorporation, that means you own a piece of its assets, a piece of its debt, you might receive a piece of its revenue (dividends), and can even participate in some company decisions by voting your shares.
    Sigh, you cannot take your share of Apple stock and swing by Apple Park and trade it in for your "small piece" of the company. At the end of the day the value is limited to what another person will pay you for the share. That is it, a share is only worth what someone else thinks it's worth paying for.
    I mean, we can break things down to the philosophical level here if you want.  After all, what's the definition of "value"?  One could say that, unless something can help sustain your existence, it doesn't really have any value.  Everything else in life is simply something to be traded for something else, and the "value" is determined at the point of that trade.

    But regardless, there are things which have a connection to real world objects, and things which don't.  In the case of stock, it has a connection to everything which makes up a company.  In the case of money, it has a connection to the region of the world from which it originated.  In the case of purely digital assets like cryptocurrency, there is no such connection.

    You are so close to getting it. Money is an abstract and doesn't exist in the real world. We print paper to represent that abstract but it's still an abstract. Currencies fail when people stop believing they have value, that is it.. Money's value build down to collective belief. Same goes with stock, we collectively believe it has a monetary value and trade based on what we believe that monetary value is.

    I have always found it funny that cryptocurrency hard to comprehend when it is really not that much different than the dollar. There are not enough physical dollars to cover ever dollar that exists electronically but we believe that all of these digital dollars exist and have value. How is that really so different than crypto currency? Money, crypto or otherwise, is an abstract and it comes down to which abstracts we think have value and what we think that value is. Not much of a difference. 

    Don't get me wrong, I participate in the collective belief system we call money but I also don't kid myself. It's largely a game of make believe. 
  • Reply 20 of 28
    maltzmaltz Posts: 283member
    maltz said:
    physguy said:
    Yet another pyramid scheme. Selling items with no intrinsic value and depending on the next purchaser to bails you out. 
    That actually isn't different from actual stock, the value is only what the next buyer will pay. The difference being that APPL has a divided but even that is a guarantee. 

    This VERY different than actual stock - actual stock does indeed have intrinsic value.  When you own stock, you literally own a small piece of that company.  Within the limits of incorporation, that means you own a piece of its assets, a piece of its debt, you might receive a piece of its revenue (dividends), and can even participate in some company decisions by voting your shares.
    Sigh, you cannot take your share of Apple stock and swing by Apple Park and trade it in for your "small piece" of the company. At the end of the day the value is limited to what another person will pay you for the share. That is it, a share is only worth what someone else thinks it's worth paying for.

    Actually, in some very specific circumstances, yes, you can do exactly that.  Stock buybacks are pretty close, for example.  I once took advantage of a stock buyback from Tyson Foods (I think it was?) where I was paid for my stock by Tyson itself as part of a temporary program where they offered to buy out people who had very small numbers of shares.  I didn't have to travel to Arkansas to trade my couple of shares for my "small piece" of the company, but otherwise, it's pretty much exactly the transaction you describe.

    Edit - to expand on that a little, though, you are partly right.  The entire company is worth, collectively, what people, collectively, are willing to pay for it.  So in that sense, yes, it's only worth what people are willing to pay.  But that's true of anything.  It doesn't mean that there is no actual asset attached.
    edited July 7 stompy
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