Blockchain technology has been hailed as one of the breakthroughs that will completely change the world around us. But since most of it will remain under the hood, so to speak, these changes won’t be as visible as some other technological wonders that had a massive impact on our lives. That doesn’t mean that changes brought by blockchain will be any less significant, though. It already has a huge impact on several critical fields, like accounting, finance, supply chain management, record keeping, and many others. However, the financial sector stands to benefit the most. Blockchain will thoroughly transform the way we handle money, from storing financial data to stock trading. Those who started early implementation are already reaping the benefits of it. Add in the fact how easy it is to develop a blockchain currency and it is easy to see why it will have a huge impact on our future. Here are some ways blockchain will revolutionize stock trading.
Trade Settlements Speeds
Real-time trading was made possible with the advent of the Internet. Before that, trade speeds were limited by the fastest means of communication, and that was a telephone. Even today, things like trade clearances, intermediaries, and regulations can take up to three days to clear and make a transaction complete. With blockchains, we will see a major increase in speed. The current bottleneck is protocols that need to be updated or even completely changed in order to fully exploit the blockchain possibilities. Once that gets solved, we will witness almost light speed trades. However, trades aren’t the only thing that will get faster. Even the ability to get listed on the market will be significantly speedier, due to much faster access to information.
Fees are a massive burden on any trade transaction and the main reason why more people don’t get involved in trading. In many cases, they are fixed or have a minimal amount, making it impossible for ordinary people to trade small quantities. They often end up with less money they have started with, even in the case of a successful trade, due to fees and provisions they have to pay. Large broker firms can easily pay millions in fees in a single year. Blockchain technology will make the whole process much cheaper. Some experts claim that it will reduce the cost of transactions by up to 80%.
Democratization of Cryptocurrency
Cryptocurrency is still, more than 10 years after bitcoin was created, considered by many as a tool used mainly by people with intimate knowledge of information technologies. Ordinary people across the globe still don’t trust cryptocurrencies enough to even consider using them, let alone save in them or used them in trades. With the wide-spread implementation of cryptos based on blockchain, with its added layer of security, this too will change. You don’t have to hold a degree in advanced computer sciences to use them. For instance, you can easily learn how to buy ripple in minutes, even if you have no prior knowledge of cryptocurrencies. As more people start to buy bitcoin in real life for their everyday needs, the wave of democratization will finally sweep away the doubts and fears we have about them.
One of the biggest gripes ordinary people have with modern stock markets is their lack of transparency. Insider trading deals behind closed doors and other nefarious activities seem to be pervasive elements of every trading room. This is where blockchain technology can really help. We finally have a system that can oversee all trades, regardless if they take place in New York, London, or Shanghai. Every transaction is recorded and stored in a safe place, making it almost impossible to delete or tamper with. Furthermore, this system can be configured to recognize patterns and easily detect any suspicious behavior, alarming the proper authorities. The best part is that anyone can access these trading logs and check them. If transparency is the aim, then blockchain is the best solution.
Inherent Safety of Blockchain Technology
One of the biggest selling points of blockchain technology is its safety, inherent in the system design. First of all, the accounting ledger records every transaction. The ledger is kept on multiple locations, in nodes around the network. Each transaction is marked by a unique cryptographic fingerprint, called a hash. Nodes communicate with each other using something called consensus protocol to compare their versions of the ledger, so even if several of them are hacked, the original data will be preserved. The best thing is that the security is scalable. Unlike other systems, in which security decreases as they grow bigger, the opposite is true for blockchain. Bigger networks mean more nodes, making it even harder for an orchestrated attack to affect the majority. There is still a risk of human error of course, but the blockchain is far safer than any other Internet technology we have today.