The stock market exchanges $150 billion worth of company ownership every day. The vast wealth of this financial market is subject to data crashes. The Flash Crash of 2010 taught investors about the cost of stock market delays. During that crash, the Dow Jones Industrial Average nearly lost its value by up to 1,000 times. A failed data file is what caused the panic.
Investors are now looking to the promises of blockchain as a protective measure against the overload of computers. The algorithms that power-blocked ledgers are indisputable records that can decentralize the transactions of stock exchanges. This type of innovation in the financial market could even eliminate flash crashes and promote greater security and stability.
Clearing Trades Through a Distributed Ledger
The Security and Exchange Commission (SEC) gave Credit Sussie the legal jurisdiction to test blockchain as it applies to trading stocks. The development of distributed ledger technology, which is what makes blockchain possible, provides the financial market with enough incentive to question greater potentials. Blockchain has shown itself to be reliable, simple, and safe since its mass proliferation through bitcoin.
Replacing the Depository Trust & Clearing Corporation
The active clearing agency behind the U.S. stock market is the Depository Trust and & Clearing Corporation. This agency receives bulk orders in the form of stock every day. If this firm is overloaded with orders, it may have to delay the time that transactions are filled. These types of delays result in false price moves that can hurt investors. Blockchain could alleviate some of this overload by expediting the processes without jeopardizing security.
Led by Paxos but Powered by Ethereum
With the potential of over 8,000 trades handled per second, the promises of stock-market blockchain is powered by ethereum and Paxos. Paxos is the agency chosen to process the final transactions of blockchain’s trades. Ethereum is now powering a majority of the blockchain networks around the world. The platform’s instant contracts have the credibility to safely create an automated-stock ledger.
Paxos leads this project as the administrating settler of any transactions cleared through a blockchain integration.
Though Still in an Age of Infancy…
The financial markets are pressured to establish greater trust for the modern investor. Digital and wireless technologies are still being adapted to the financial world. The promises of blockchain can improve the technologies we have and offer greater safety.