Sinjin David Jung thinks the poorest of the poor should be able to invest in Tesla or Apple like anyone else.
On Sept. 29, the International Blockchain Monetary Reserve that Jung heads unveiled the MESE.io index pool, a microequity stock exchange aimed at letting poor and unbanked people invest very small amounts in selected stocks.
Each share of these stocks—the first seven are top tech firms—will be initially divided into 10,000 tokens based on the share price. After that the tokens will be able to rise and fall in value separately, as they are not actually represent fractional shares.
“Imagine trying to invest a single dollar in a way that would have any tangible return as an asset without being high risk? It’s virtually impossible,” said Jung in a release. “Even with financial inclusion, price point accessibility is not enough if the overhead fees of traditional finance are still in place like bank ATMs or agent fees.” He added:
“It isn’t about fractionalizing the current system, it is about creating new financial opportunities that work at the level of emerging markets where even a single dollar matters.”
It’s hardly the only blockchain project aimed at the very poor. Many, like mobile-based payments firm Celo, are focused on bringing banking services and cheap remittance payments to the unbanked.
Access and stability
Making the stock-tracking tokens affordable isn’t enough, Jung said, telling Modern Consensus, “this is a different system [as] opposed to fractional, which is only providing value in a lower entry price point.”
MESE.io’s goal is to combine the benefits of developed markets’ stability while still encouraging financial inclusion to emerging markets buyers.
The exchange is aimed at people in “developing markets who normally have no access to these types of high-tech equities,” said Jung. “So, our focus is on accessibility in comparison to local unstable equity markets, or bank savings. The major achievement here is that this becomes a new microlevel trading market which is independent but guided by the traditional equity market.”
The first seven stocks to be tokenized are Microsoft, Apple, Tesla, Twitter, Amazon, Netflix and Google.
So, with TSLA trading at $421.20 at the time of writing, each of those token will initially be valued at $0.04212, or about 4.2 cents.
While the token price will not be directly tied to the underlying stock, algorithms will be in place keeping the price range within 10%-15%. The added value of the tokens is the value the microequity’s “accessibility and added stability” bring in the buyers’ own, often unstable markets, Jung added.
Arguing that microequity “can create wealth regardless of socioeconomic standing,” Jung described the project as moving microfinance beyond microloans. The project’s goal is to open local microequity exchanges across the globe in emerging and developing markets.
“Blockchain technologies allow for this by removing much of the overhead of financial administrative and infrastructure costs that prevent value from being accumulated at the microfinance level,” he said.
While the Reserve is a described as a microfinance economic development agency, MESE.io is technically a for-profit endeavor, Jung said. But, 100% of the profits are ploughed back into the project. After the launch, the trade fee will be set at 0.25%.