One way web3 will make my life easier
Before I tell you how web3 will make my life easier, I’ll let you know what has been difficult, transferring stock shares between institutions.
Last year the company I work for, Softchoice, went public in an IPO. Through an employee purchase plan, I had accumulated some shares. I had some contribution room in my retirement account and realized that if I transferred these shares in-kind, I would get credit for a retirement contribution and not have to cash the shares. Brillant! Well, here is what happened.
I initiated the transfer of shares from one institution to another. Since we were coming out of the IPO, I thought I should do it right away in case the shares went up. When the price is lower, I can transfer more shares. I waited. And waited. The shares weren’t showing up in the other institution where my retirement account is held. After many phone calls to both institutions, I discovered the problem. My name didn’t match. My middle name is what I use on a regular basis. One institution had my legal first name and the other my middle name. Sure I must have filled out the application forms that way, but one would think it would have been caught when my identity was validated.
So, I had to fill out forms, copy some identification and mail (yes with a postal stamp) everything in to get my name changed at the institution. Then I re-initiated the transfer.
The shares did show up in the account a few days later. I was suspicious that they did not get registered as a retirement contribution. After another phone call, I was told that I had to provide proof that they came from a non-registered account. More paperwork to submit. Even when the shares were marked as registered the book value was used not the market value. More phone calls to get it corrected.
Let’s imagine we are in the future and all stock shares are recorded on a blockchain, and we have web3 apps to manage our shares. In web3, there would not be multiple identities with multiple institutions. There is a single identity we hold which transactions are managed with. My name problem would go away.
Next up, is the issue of proving the shares came from a non-registered account. All business logic is built into smart contracts run on the blockchain. This means the transaction itself would be smart enough to know the types of accounts involved.
What about getting the right value recorded for the shares? Again, the business logic is built into the smart contract. It would automatically be set correctly as part of the transaction.
Oh and by the way the share transfer took over eight weeks and the stock price went up substantially during that time, reducing the number of shares I could transfer to my retirement account. How long would it take in web3? It depends on the blockchain, but a current Ethereum transaction would be less than an hour and could be as quick as seconds. No phone calls and wasted time correcting mistakes. I look forward to that day.
What’s even more exciting is this is a small example of the range of scenarios that web3 will modernize with our finances.
Originally published at https://www.linkedin.com.
