Source: Cointelegraph Original: "{title}"

Views from: Mike Cahill, Co-founder and CEO of Douro Labs

Despite the ongoing enthusiasm for cryptocurrencies among institutions and the pervasive narrative of democratized investing, the majority of the world's population still lacks access to traditional wealth accumulation channels.

Take the United States as an example—where the top 10% of earners own over 90% of all stocks. Globally, the situation is even more severe: billions of people lack financial literacy, digital tools, or minimum capital, and cannot even access the most basic investment opportunities.

Traditional institutions need to do more than just invest in cryptocurrencies to bridge this gap—they must begin to utilize digital assets for entirely new use cases.

The part of traditional finance (TradFi) most susceptible to disruption is stocks. The opportunity to invest in private company shares has historically been limited to the wealthy and well-connected. It is often restricted to the most economically developed countries. However, by injecting decentralized technology into the three fundamental components of our financial system—pricing, execution, and settlement—global access to stocks can be achieved.

The Cornerstone of Traditional Finance

Stocks typically refer to shares of private companies, which are one of the most powerful tools for wealth creation. Aside from regulation, the main factors limiting access to stocks are the infrastructure that underpins our financial system: outdated and inaccurate pricing data, exclusive execution venues, and painfully slow settlement cycles.

Pricing

Traditional stock markets are private. Here, pricing data is locked behind confidentiality agreements, paywalls, and a group of individuals who wish to keep this information to themselves. Access to accurate, real-time pricing data is crucial for investors to make informed decisions; it is a necessary component for participating in the stock market. If pricing data remains in the hands of those who can afford access or are within the right social circles, this system will continue to support a small group of wealthy and privileged individuals.

Execution

While many applications and platforms may make buying stocks seem as simple as pressing a button, the reality is that making such investments almost always requires strict vetting processes and minimum investment thresholds, which ordinary investors cannot easily meet. Although it seems that public markets should be free from these barriers, brokerage fees and geographic restrictions still hinder participation. Thus, the current system only exacerbates the phenomenon of "the rich get richer, and the poor get poorer."

Settlement

Most traders have experienced the slow, bureaucratic, and risky nature of the current equity settlement system. A single transaction can take days to complete. If it is a cross-border transaction, the settlement time may be even longer. This leads to funds being locked up, further discouraging small investors from participating—creating a snowball effect that limits stock access to the most elite traders.

While these barriers are undoubtedly systemic issues, they are also entirely solvable. As history has repeatedly shown, innovation always drives change. This is where decentralized finance (DeFi) comes into play.

Reimagining Infrastructure through DeFi

Decentralized technology has the potential to reimagine the infrastructure of traditional finance, creating a faster, more accessible, and more efficient system, unlocking new forms of stock participation. These forms include synthetic stock markets, tokenized private equity, and even equity-based prediction markets.

Regarding pricing, execution, and settlement, decentralized finance has the opportunity to collaborate with traditional finance, combining strengths to provide a new foundation for the financial system that promotes fairness, access, and transparency.

Decentralized price oracles provide real-time, accurate stock price data at a fraction of the cost of expensive Bloomberg terminals. This allows traders from any background or region to access fresh market data and trade stocks with the same knowledge as the most elite traders.

At the same time, decentralized execution platforms open the market for fractional shares and tokenized stocks. If traders have an internet connection, they can trade through smart contract-supported transactions that automatically match trades, provide liquidity, and fulfill orders. This enables traders to purchase small fractions of these assets, empowering people in the world's most remote and isolated areas to own shares in high-growth companies on par with U.S. accredited investors.

Finally, settlements in DeFi are nearly instantaneous. This is because blockchain removes the need for intermediaries, allowing stock trades to be completed in milliseconds. This significantly reduces counterparty risk while unlocking capital for continuous use, making it more attractive for small investors.

Building the Next Generation of Finance

Creating a truly democratized financial system means not only encouraging institutions to buy and trade digital assets. It means rethinking the existence and operation of our existing financial infrastructure. While stocks are one of the most powerful wealth accumulation tools, the majority of the global population remains unable to access them due to geography, tradition, and privilege. By reimagining pricing, execution, and settlement through decentralized innovation, the stock market can be fundamentally disrupted—narrowing the wealth gap and freeing billions from the constraints of a few.

Views from: Mike Cahill, Co-founder and CEO of Douro Labs

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This article is for general informational purposes only and should not be considered legal or investment advice. The views, thoughts, and opinions expressed in the article are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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