U.S. online retailer Overstock made stock transactions using the blockchain for the first time in the world. Now here we discuss on how will technologies that guarantee “exchange of value”, guarantee transactions, financial markets, and how to renew?
Overstock, the online retailer, is the first company to publish shares on the Internet using Bitcoin blockchain technology and publicly distributed shares to 126,000 companies. Over two years, Overstock made a new technology to guarantee financial transactions through a subsidiary named based in Salt Lake City. Patrick Burn, an online retailer and a highly inventive CEO, Overlooks Blockchain not only as a stock trading site like NASDAQ but also as “markedly improving all markets”.
Block chains are virtual ledgers operated by a global computer network that is not controlled by specific companies or government agencies. This ledger records the exchange of currency exchange using bitcoins. In addition to that, you can record anything of value, including stocks and bonds. In other words, this technology will make it possible to manage the flow of financial transaction more accurately and cheaply. You can eliminate things like intermediaries and loopholes of transactions that characterize today’s market.
Baan says that the “sputnik moment” is coming to the world of stock today. In other words, it is a symbolic moment that the world first experiences. “There is no huge rocket nor a rocket launch for the moon,” he says. “But it symbolizes the era when we are alive.” He hoped to license the technology, so that it can be used not only by companies outside the organization – businesses like overstock business but also by stock trading, banking and other financial organizations There.
However, it is now necessary for a large number of intermediaries to participate in order to provide stocks. Although there are shares offered on the Internet, companies must also issue stocks for conservative and analog over-the-counter transactions (OTC) in line with traditional ways. It shows that there is a long way to get technology just used out to be used in Wall Street.
That said, Wall Street is aware of the existence of technologies that will revolutionize the traditional capital market of blockchains. In December 2015, mega banks such as JP Morgan, Wealth · Fargo, State Street , etc. started an open source project called ” Hyperledger “. Other banks also participated in a consortium named ” R3 ” that focused on the block chain. NASDAQ and others are exploring the possibility of blockchain technology to record stock trading of unlisted companies. However, I do not yet know what people and how this technology will be used.
On the other hand, the momentum of the blockchain is not all heading in the same direction. Goldman Sachs and three large companies pulled out of the R3 consortium. Now that the momentum is getting weaker as a result of the enthusiasm brought about by the expectation of “disruption” that block chains can cause, the momentum is weakening, Rick who leads the technical department of Financial Consulting Firm, Finadium Stinchfield says.
Megabanks apparently seemed to notice that disruption did not happen so soon. “The momentum is slowing down and things are going in an orderly direction,” Stintfield says. “Bankers and brokers do risk business, but they dislike technical risks.”
When Overstock offers a new “blockchain stock”, Burn announced at the FinTech conference in Las Vegas in October 2016. And one month ago, overstock shareholders were able to buy new blockchain shares.
Now overstock can transfer blockchain shares to investors account, indeed 126,565 shares are bought by blockchain technology. In December 2015, the Securities and Exchange Commission of the United States officially licensed these management methods and operates its own blockchain. It seems at first sight that it hinders the purpose of this technology. The power of the blockchain is in “dispersion” – that is, it is a technology that no one can control.
Nonetheless, it is conducting all transactions through block chains, and it keeps public records no matter what trading is done on any private system. Burn’s purpose is to bring transparency not found in today’s market.
Several overseas governments are consulting overstock to use this technology, Bern says. However, some people raise a warning that this technology can not catch up with the speed of change in the US market, which does not know what will happen, including Stintyfield. “I can not imagine that NASDAQ uses blockchains,” Stintefield says. “This technology has not reached the satisfactory level yet”.
Block chains are thought to be able to change more complicated places in capital markets such as stock settlement systems and stock markets. In Wall Street, it still takes up to 3 days (T – 3) to actually move shares between the two organizations. The blockchain can make it 0 days (T – 0) .
Like “Game of Thrones”
Basically, today’s financial markets are being driven by three major players, stock exchanges, brokers and securities central custodian. Burn believes that if any one of these three adopts a blockchain, the other two will be extinct and the enormous expense of guaranteeing the transaction can be reduced. “It’s like” Game of Thrones, “Baan says.
In the meantime, it is likely that no one will control this game. Stintyfield agrees, however, that block chains will become the main flow of the financial system either. “Block chains combine stock exchanges and centralized custodian securities,” he says. “The contract will be completed at the moment of trading”.
Blockchain will not revamp Wall Street right now. But the initiator to change stock trading in the 21st century to a totally different one that I have never seen is immediately there.
The author has an experience of more than 6 years of corporate experience in various technology platforms such as Big Data, AWS, Data Science, Machine Learning, Blockchain, Python, SQL, JAVA, Oracle, Digital Marketing etc. He is a technology nerd and loves contributing to various open platforms through blogging. He is currently in association with a leading professional training provider, Mindmajix Technologies INC. and strives to provide knowledge to aspirants and professionals through personal blogs, research, and innovative ideas. You can reach him at: Linkedin or Email.