Traditional financial market

Until now, the term "financial market" has primarily referred to the traditional financial markets that have thrived within a centralized system for an extended period. Traditional financial markets have grown based on the advantages of efficient and prompt decision-making and operations, coupled with the ability to assign responsibility in case of issues. However, why has the virtual asset financial market suddenly emerged? The reason lies in several problems within the traditional financial markets, which can be summarized as follows:

1. Excessive transaction costs due to complex procedures In the traditional financial markets, solving trust issues without the intervention of third parties is challenging. Structural issues like these necessitate complex procedures for the transaction of real-world assets, incurring significant transaction costs (search costs, intermediation costs, trust costs, etc.). For instance, in real estate transactions, various transaction costs such as property search costs, intermediation costs, and trust costs (notary, trust companies, etc.) are inevitable.

2. Difficulties in securitizing assets In the case of real estate, the quintessential real-world asset, obtaining a loan secured by real estate to securitize an asset requires passing a rigorous vetting process by the bank, which can be time-consuming. Real estate transactions are also characterized by the considerable magnitude of transaction amounts. This makes it challenging for many investors to enter the real estate market, and attempts to secure funds through real estate transactions often face difficulties due to the lack of transactions.

3. Lack of autonomy due to control of central institution In the traditional financial market, the central institution monopolizes the main permissions, and the way of trading is restricted by the central institution's policy. Due to this structure, people are experiencing various inconveniences. For example, trading hours are limited by the central institution in each country, and procedures are varied and complex depending on the central institution. In the traditional financial market, there are many central institutions such as countries and banks, and the policies of each central institution are all different, so the process of trading assets varies and is complicated depending on the region, product, situation, etc. For example, if a user from a certain country wants to trade assets in another country, he or she needs to know the policies, products, etc. of the other country's asset market, which requires excessive costs, such as studying the policies of the other country's asset market. In some cases, it may even be impossible to trade at all.