Ever since Bitcoin has hogged the limelight as a cryptocurrency that has attracted the masses, the fanatics and even the critics couldn’t help but nod in unison that what makes bitcoin so valuable is its underlying technology. Though how the digital currency would replace the fiat currencies and also meet the standards of conventional regulation is still a subject of discussion, the ledger based technology has already found numerous applications and has now etched its way into Wall Street. Blockchain Technology is well suited for systems where storing, tracking and monitoring of continuous and heavy volumes of data in real time is of paramount importance. Many Startups have emerged in the recent times which want to use this technology to execute and settle trades in quick time, which would save Wall Street banks and investors billions of dollars by radically reducing the lifespan of a transaction.Let us see how various companies have adopted blockchain technology in an attempt to simplify the complexity of the financial world.
NASDAQ leading from the front
Nasdaq CEO Bob Greifeld has said that the US based stock market plans to trial blockchain technology as part of its ‘Nasdaq Private Market service’ in May. Nasdaq has teamed up with infrastructure provider ‘Chain’ to use blockchain for issuing and transferring shares of Privately held companies. The basic aim of the platform is to speed up and simplify how everything from stocks to loans and derivatives is processed.
“The application of blockchain technology within Nasdaq’s private market aims to modernize, streamline and really secure cumbersome administrative functions” – Bob Greifeld
Fredrik Voss, vice president and head of blockchain strategy at Nasdaq has mentioned that the Nasdaq Private Market initiative is all set for launch later this year and would be primarily for back office operations for things like settlement and custody. Apart from using the technology for its own clearing and settlement, Nasdaq also sees this as a potential opportunity to provide services in the field of depository technology.
Overstock means business
While most organizations are taking the primary steps, Overstock.com has quickly pounced on front end application of the technology by launching its own blockchain based private and public equities trading platform- ‘tØ’ (tee-zero). The process of trade settlement is heralded to be a lengthy one and at times, it might take up to 23 days to complete the settlements in loan markets. tØ comes up with the promise that the trade itself is the settlement, the ledger based technology enables the platform to track the trades in real time and the settlement becomes easy since the monitoring is simplified.
“We built a platform and we’re launching tØ.com, where the trade is the settlement. That’s the big disruptive idea, the entry is both the trade and the settlement, it doesn’t have to be a separate process.” – Patrick Byrne, CEO of overstock.com
In order to imbibe the platform into Wall Street, Overstock has acquired Wall Street brokerage firm SpeedRoute. SpeedRoute connects broker-dealers with over 11 major equity exchanges in US and has significance presence in the stock market scenario.
Shaping the Vision
Symbiont, a pioneer in the creation of Smart Securities on blockchain, has secured $1.25M of seed funding from major financial organizations. The company is seeking to eliminate the inefficiencies and opaqueness developed in the markets by utilizing the speed and security of cryptographic distributed ledgers. By being able to do this, Symbiont believes that the transactions in the markets will be faster, efficient with increased liquidity, transparency and security. The main objective of this integration is to make programmable versions of traditional securities available on the ledger. This would make it easy for the users to issue, trade and process a range of instruments more efficiently in a single, global, decentralized and distributed peer-to-peer financial network.
Hence it is evident that the blockchain technology has the potential to simply and transforms the complex financial world into a very simple network. What further developments would result from its integration can only be speculated for now.
Deepak Bharadwaz is a Market Data Analyst for IHB’s Bitcoin Trading Intelligence platform. Before trading bitcoin he was heavily involved in Intraday trading of Coffee and Cocoa Futures Contracts on the Inter-Continental Exchange (ICE) and London International Financial Futures and Options Exchange (LIFFE).
He trades the markets based on price action, supply-demand chain, fundamentals and macro-economic data inflow. His comprehensive understanding of various technical indicators guide him as he executes strategies based on technical analysis.