Stocks vs. tokenized stocks

01

Same price, different thing

A stock is a share of a company. A tokenized stock is a token on a blockchain, made by a separate company called the issuer, which holds the real share and designs the token to follow its price.

So the two usually move together. What differs is everything around the price.

02

What you own

With a stock you are a shareholder: you can vote, and you receive dividends when the company pays them.

With a tokenized stock you own a token. What it gives you is whatever the issuer's documents say, which is usually the price and not a vote. Dividends are handled the way the issuer describes, often by adding them to the token's value.

03

Where and when it trades

A stock trades on a stock exchange, during market hours, through a broker. A tokenized stock trades on a blockchain at any hour, from your own wallet.

Far fewer people trade the token than the share. Its price can drift away from the share's, most of all at night and on weekends when the stock market is closed.

04

Who holds it

A broker holds your stock in an account in your name. In the United States, brokerage accounts are protected up to set limits if the broker itself fails (not against a price falling).

A tokenized stock sits in your own wallet, under your own key. Nothing protects it if the issuer fails, so the issuer is one more thing you are relying on, on top of the company.

05

Who can buy it

Anyone who can open a brokerage account can buy a stock. The tokenized stocks on public blockchains today are issued outside the United States and are not for people in the United States. The lesson "Tokenized stocks: what they are, and who can trade them" explains what that means on Viru.