“Investing in stocks can be a daunting, complex and decidedly exclusionary activity,” says Bill Barhydt, Abra's CEO. To that end, his company’s mobile cryptocurrency wallet app has announced a new feature which will allow investors to purchase traditional stocks using bitcoin. The new feature is built into the existing Abra app that enables users to buy and sell cryptocurrencies.
Crypto investors in the 155 countries where Abra has its presence will be able to invest in traditional stocks, such as Apple or Amazon, as well as in exchange traded funds (ETFs), using both cryptocurrencies and fiat directly from their mobile app.
According to Barhydt, everyone should have access to capital markets, regardless of where they live in the world or the amount of capital they have at their disposal. This is where Bitcoin comes in.
The world's most popular cryptocurrency has shown its capacity to serve as a democratic form of money by creating an open financial system, and he believes his company's app could change how smaller investors access publicly traded companies and other securities.
"We are building Bitcoin-backed investing products because, for the first time, we can truly democratize access to investment opportunities at global scale. It shouldn’t matter where you live or how much you earn to be able to make investments and participate in capital markets. We’re excited to allow anyone to start investing in global equity products and take control over their savings.”
Cryptocurrency exchanges have been offering features that allow traders to do more than buy and sell crypto of late. Last year, social trading platform eToro launched a mobile trading app that will enable investors to invest in fiat currencies, stocks and cryptocurrencies.
"Abra is different by offering this on a global scale," Barhydt pointed out, in correspondence with Bitcoin Magazine. He said that the Abra app makes it easy for investors to make fractional investments in stocks, commodities, ETFs and indexes.
“These are not tokenized securities,” he added. “We are not creating an ERC 20 chain. All investments in stocks, ETFs, indexes, etc., are collateralized by bitcoin.”
Crypto Collateralized Contracts
The new feature will leverage Abra's Crypto Collateralized Contracts (C3s), a model that allows an investor to convert their bitcoin into different investment options, without having to move money from one wallet to another. The C3s act rather like a stablecoin whose value can be pegged with a reliable price feed to the value of bitcoin.
For every security purchased on Abra, the investor enters into an investment contract, a multi-sig smart contract based on P2SH scripts on the Bitcoin blockchain, which automatically determines whether or not an investor has made money based on the price of the asset. For instance, if an investor wants to purchase $200 worth of Amazon shares, he will place $200 worth of bitcoin into a contract and the movement of the stock's price will determine the addition or subtraction of bitcoin from the contract.
According to Barhydt, Abra takes all the risk here, which it hedges in the open market, the instant a user creates the investment.
Barhydt also touts the broad crypto and fiat offerings on Abra as a unique selling point, as well as its non-custodial nature — so users hold the fate of their funds in their hands.
"Abra does not collect, store, or have access to its users’ funds. So individual users hold their private keys in the Abra app on their smartphone," Barhydt said.
For investors who register for the early access program, Abra is offering zero trading fees, with a $5 minimum investment.