Financial industry has undergone the application of blockchain in Stock Market. How to exploit the competitiveness of blockchain in stock market transformation?
The coming future of money, banking, supply chain, recording, and other industries has already been profoundly renewed by blockchain technology. Blockchain technology is the fundamental technology for not only developing crypto-currencies like bitcoin and ethereum but also transforming stock trading platforms and the way financial data is stored and sent throughout the world.
It is undeniable that the extensive influence of blockchain in the stock market awakens the perception of all the investors about digital stock trading platforms with superlative security, decentralized database, other attached utilities. Stocks markets all over the world are exploring how they can leverage blockchain technology to upgrade cost-saving and efficiency, tighten security and lower all the risks. Let’s analyze the details of this new technology and its operation.
What Is Blockchain Technology and How Does It Work?
Blockchain is known as a database innovation that creates a shared public ledger where all parties have the right to monitor, encrypt, and see transactions. Blockchain technology enables the dissemination of ledgers for participants to independently verify if a modification to the database is performed. Participants have been proposed a 100% visibility as same as regulators.
When a transaction with a security token is launched, computers feverishly ensure that the deal fits into the chain of previous transactions for that account and that security. The transaction is complete after it has been confirmed. Then, a new block is added to the decentralized database called “chain” and stays irreversible.
Blockchain revamps the stock markets
The most advantageous approach for blockchain technology to be exploited in stock trading is to speed up deal settlement. Due to the involvement of intermediaries, operational trade clearing, and regulatory processes, stock market traders, brokers, and regulators must go through a time-consuming and costly process that normally takes three days or more to complete transactions. Through automation and decentralization, blockchain technology has the potential to make stock markets far more efficient.
Despite the inevitable growing pains that every new technology, such as blockchain, must go through, it’s logical to assume that blockchain technology follows in the footsteps of the internet from the 1990s to now. Only the strong survive, and some industry insiders are already speculating that blockchain technologies may be the next killer technology. Blockchain technology has the potential to transform businesses, governments, and even society for the better.
The total value of equities traded internationally is roughly USD 77.5 trillion, according to the World Federation of Exchanges database, and the market is becoming bigger and more sophisticated day by day. With such a growing concern about transaction efficiency, major stock exchanges are looking into blockchain’s potential to offer virtually instantaneous settlements and automate compliance through smart contracts, all while increasing security and transparency.
The democratization of trading is anticipated to be another significant influence of blockchain on the stock market. The association between distance from the stock exchange and entry price is diminished as a result of decentralization, rendering closeness to exchange servers meaningless. The need for market middlemen is reduced, therefore, transaction costs are cut down. The share settlement process becomes more transparent.
Blockchain in Stock Market confronted with several risks
On the contrary, blockchain technology also brings inherent risks to stocks organizations. There are three main categories of risks: standard risks, value transfer risks, smart contract risks. To utilize the upper hand of modern technology, businesses are recommended to grasp the dangers and equip the proper protections. It’s also crucial to comprehend the evolution of regulatory guidance and its indications.
akaChain is backed by FPT Software, a globally leading technology, and IT services provider. It is an end-to-end, permissioned, multi-chain network based on the Hyperledger Fabric. Since its establishment in September 2018, akaChain’s product has assisted many enterprises, from SMEs to Fortune 500 firms, to transform with distributed ledger technology. The company provides a broad range of permissioned blockchain-based products and services in multiple sectors, including retail, supply chain, banking and finance, insurance, shopping mall management, etc. to transform with its distributed ledger technology. For more information, please visit https://blog.akachain.io/
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