As pointed out it is important to separate the concepts of asset ownership and asset trading.  Stock exchanges exist because they provide very low latency trading.  From a technical (but not legal) standpoint colored coins (or other blockchain technologies) are a replacement for shareholder registries.   However today the overwhelming majority of shares in publicly traded companies are not registered to an owner but instead are "in street name".  The broker registers a number of share in street name and then upon proof is allowed to trade an equal number of shares on the exchange.

Exchanges aren't a requirement for recording ownership of companies.  You could remove all exchanges today and brokers could still (crudely) facilitate transfer of ownership between individuals.  That is the portion that blockchain type technologies replace.


I would recommend a good securities lawyer.  There is no technical requirement for conventional exchanges to use underwriters and broker dealers.   There are plenty of legal and regulatory requirements.   Switching to using a blockchain doesn't exempt you from existing laws.  Namely SCOR has certain know your investor requirements and major shareholders (10%+) must be free of regulatory problems in the past.   This could be done with a blockchain but it would require linking public keys to identities and limiting transactions only to authorized participants.

To answer your general question, is a blockchain useful for recording changes in ownership of "smart property"?  Of course.  The harder question is can smart property be done in a manner that doesn't violate existing laws and regulations?  Maybe but not in an open pseudo anonymous manner as bearer shares are no longer legal in most (all?) jurisdictions.  Ironically bearer shares use to be very common and they could be seen as a paper equivalent of modern smart property.  So the blockchain technology of the 2010s has a good compatibility with the security laws of the 1900s. 

Blockchain-based applications will replace or otherwise transcend the stock market, the court system, the voting system, IPOs, and just about anything else you can imagine.

The innovation of the blockchain changes everything. So much clunky, centralized modern systems will be made obsolete in the comes years. I can't possibly overstate how much this will change every facet of our world.

<sarcasm> Being able to trade stocks with only minutes of confirmation time sounds fantastic! </sarcasm>

Is this wishful thinking or based on actual work that someone is doing?

We have been talking with the law firm that wrote the model legislation for Minnesota.  Stock must carry a $1 par value, and the firm is permitted to raise up to $1M US every 12 months.  I know that when I was looking for venture capital a few years back for another venture, the vultures didn't want us to do it.  But then again, they didn't invest either so you decide which is the better route :-)

I'm all for linked identities in the transaction -- it would also offer some protection against theft because if someone swiped your shares and if they were not "of record" we could just repudiate the transaction.

Which is why I am also in favor of a much longer block generation time -- such that you could easily repudiate theft as well as guard against 51% attacks.

It's all high level at this point.

Yes Bitcoin is better suited to replace stock markets
It can get rid of significant costs to trade and still be a viable efficient system
A decentralized stock exchange has tremendous utility but it will take some time to come to market.
https://bt.irlbtc.com/view/52494.0

This is retarded.   Bitcoin can't replace stock MARKETS.   A market is where people go to exchange.

Even bitcoin is traded on an exchange.   If you can't can't trade bitcoins without an exchange then how can you trade stocks?  Meetup up through craigslist list and trade stocks ala localbitcoin?   LOL

Maybe colored coin can replace an actual stock certificate but who has those anymore?

Do you even trade stocks?   Without a market maker who matches orders?  How do you do stops,  limits and OCOs?   Can you see the other bids and ask coming from other exchanges?

True! I believe the blockchain concept will be applied in the stock market. But at the moment the there are still a lot of pitfall  and confusion in cryptographic technology. People will accept it as this new technology is improved and  all of these things are solved.