It’s a strange to consider that Wall Street is actually embracing blockchain technology – the same technology which is used by Bitcoin – a currency made to undermine the power of Wall Street. The theory behind this acceptance is that blockchain technology is encrypted, yet can track financial markets accurately and efficiently.
This change in thinking started fairly recently – just before Christmas of 2015 – when Overstock.com CEO Patrick Byrne announced that stock would be distributed via blockchain – the very same one that Bitcoin uses. Shortly after that, the Depository Trust & Clearing Corporation, a company that facilitates the actual changing hands of stock after a sale, spoke of a desire for the financial industry to collaborate on blockchain technology citing the need for modern and cohesive solutions.
Byrne expressed a desire for a new technology when he complained that stock sales weren’t allegedly being settled properly, allowing for people to sell stocks that they didn’t actually have. He thinks that using blockchain technology for stock sales will not allow for loopholes like this that create some level of fraud in the stock market. While DTCC probably doesn’t agree with Byrne’s sentiments, they do agree that using a blockchain will make things easier to keep track of and avoid the possibility of loopholes, like the one Byrne describes.
Patrick also believes that using blockchain technology will easily democratize the stock and loan market – anyone would be able to participate, and Byrne seems to hope that using this technology can reinvent the way we interact with the stock market and the way people use it. It seems that there are many who agree with Byrne, including executives at Nasdaq, who are already building a private stock exchange using blockchain.
How do you think this will affect your investment future?
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