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I think "commodity exchange" would be the correct term, as opposed to "stock exchange." Trading commodities on an exchange definitely makes sense. Indeed, all
by n00b101 10y ago
I think "commodity exchange" would be the correct term, as opposed to "stock exchange."
Trading commodities on an exchange definitely makes sense. Indeed, all legal commodities are traded on exchanges. It also makes sense for exchanges to create standardised grades for a commodity, in order to control for variations in the product. For example, the Chicago Mercantile Exchange defines the following grades of wheat just under a single tradeable contract: "No. 2 Soft Red Winter, No. 2 Hard Red Winter, No. 2 Dark Northern Spring, No. 2 Northern Spring, No. 1 Soft Red Winter, No. 1
Hard Red Winter, No. 1 Dark Northern Spring, No. 1 Northern Spring."
Commodities are generally traded on futures exchanges. You are not simply agreeing to buy a specific grade and quantity of the commodity for a certain price, you are also agreeing on exactly where and when that commodity will be delivered. This normally involves having standardised delivery facilities and handling procedures for the commodity. Since the transaction entails agreeing to purchase something at a future time, it is called a futures contract.
- outworlder 10y agoI've worked with commodity exchange software, for cocoa. It is amazing the amount of rules they have come up with. Not only you have grades, but there's a whole process to store, maintain, audit, split and combine commodities. What's more, once it is accepted at a warehouse, everything else happens electronically, until such a time the commodity actually has to be moved somewhere. In the mean time, all that gets traded is the paper. Or its electronic version, or paper. If paper is involved (usually is), then there are business specializing in storing it, and providing certification that you indeed own this piece of paper, with in turn says you own X tonnes of cocoa of such grade at some location.
- walrus01 10y agoI don't think you can treat it like a commodity exchange (futures contracts for N tons of soybeans, for example), even if you restict the platform only to dried flower bud product and ignore every other form of cannabis, due to the extreme variety of types of flower and plant. It would be like trying to have a chicago mercantile exchange commodity platform for wine.
- hkmurakami 10y agoWell it's a techcrunch headline meant for a mass market audience. Inaccurately calling it a stock exchange is likely more effective than accurately calling it a commodity exchange.
- stephenboyd 10y agoTechcrunch is a business news publication and they've screwed up here. 'Wholesale marketplace' is the right term.