Blockchain enhances liquidity in private and alternative investments

Blockchain makes private investments more accessible and boosts financial inclusion.

The private and alternative assets market has seen significant shifts in the past six months, driven by the increasing adoption of new technologies and a growing awareness among investors, according to Willie Chang, Chief Operating Officer and Head of Exchange at Alta Alternative Investments.

"We've been seeing a lot of exciting changes, and I think it's really just continued adoption," Chang said. He noted that the gap between the potential and actual allocation of investments into alternative assets remains vast, with an estimated $19 trillion still untapped. 

"In particular, this kind of gap is strongest in high net worth individuals," he added. Over the past six months, there has been a noticeable increase in this investor group's access to alternative investments, driven by a greater understanding and comfort with these asset types.

Chang emphasised that a major driver of this shift has been the role of blockchain technology, which has introduced several key features that are transforming the market. He pointed out that one of the most powerful aspects of blockchain is its ability to fractionalize investments. 

Traditionally, alternative investments required substantial capital, limiting access to high net worth individuals. However, blockchain and fractionalization have reduced the investment threshold, making these opportunities accessible to a broader range of investors, including retail investors.

Looking ahead, Chang believes that the growing access to data will further enhance the market's attractiveness. As companies continue to scale, they are accumulating more data on the performance and historical trends of private alternative investments. 

"Building a really, really big marketplace which is able to reach as many issuers and investors as possible is key,” he said. Alta has already made strides in this area by connecting with licensed broker-dealers from Singapore, Malaysia, and Hong Kong, with plans to expand further. As the marketplace grows, it offers investors a wider variety of products and a more comfortable environment for making investment decisions.