Why the equity market needs a blockchain revolution

Blockchain technology is undeniably an ingenious invention, which since its launch in 2008, has grown to become one of the biggest digital transformations to date. The investment into this digital ledger has seen millions of pounds from global banks in a desire to future proof their offerings and maintain their competitive edge.

Blockchain technology has a transparent digital ledger of transactions and records that are immune to any change or deletion which, in turn leads to simplified processes such as ownership, transfer and payments. This is just one of the reasons why such technology has become popular over the last few years with businesses and investors.

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By offering these additional traits of increased security, lower costs, time efficiency, and error resistance, blockchain is transforming multiple industries with its decentralised environment.

An underlying reticence to change

In the wider global economy, the equity market is an essential part. For many, it provides a path for future investment and contributes to the overall financial state of the world. The adoption of blockchain technology within the equity market will not only increase the speed of trading and settlement processes between businesses and investors, but also pave the way for streamlining transactions. It is a well known fact that the global equity market has been remarkably slow on the uptake of this revolutionising technology, compared to the likes of digital currency and mobile payments.

Not only is the global market struggling to understand the blockchain technology and its benefits, but finding a way to better align the wider cryptocurrencies trend with the paper money of old.

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Quite surprisingly cryptocurrency is still being viewed in a different way compared to funds, securities and legacy stocks. The situation hasn’t, of course, been helped by the fact that the governments have been so slow to ensure regulations and taxation for cryptocurrencies are brought in line with the traditional currencies we know.

A digital transformation is needed

The equity market has significantly fallen behind other advancing developments in the wider financial sector, and it is essential that it looks to perform a digital transformation to stay relevant and become less expensive, restricting and intricate.

Two hundred years ago, when the global equity market was created, the world was a very different place. Whilst there was something of a transformation in the 1980s when trading volumes and volatility sky rocketed with the computerisation of the trading floor, another step change is most certainly required with security for its users recognised at its core. Of course local stock exchanges made sense a long time ago, but today the world has become a lot smaller and the equity market needs to take advantage of a more global investment pool.

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There is no end to the potential of this technology in improving costs and lowering risks for the equity market. Blockchain is both transparent enough to ensure there is democracy, visibility and honesty, whilst being private enough to protect businesses and investors alike. The technology is an enabling force to removing the middle layers, administration and reconciliation steps currently hampering today’s global equity market.

Goodbye, middlemen

A modern equity network needs to be built with the interests of both investors and business owners at its core. It needs to ensure that trading becomes a more seamless experience and bring the power back to the individual investor. Through decentralisation and the use of cryptocurrency, blockchain can provide a safer and more transparent network for trading from both parties.

By cutting out the middlemen, both private and public businesses are able to sell shares in their companies direct to investors and regain control to be able to drive their business forward. All the while ensuring that businesses and investors become more indelibly linked paving the way for a smooth, and streamlined trading process that will revolutionise the equity market.

>See also: 5 ways blockchain technology is changing the world

The time is now

A revolution and shakeup in the equity market is desperately needed; one that removes several barriers to entry and investment. Blockchain can help to remove the well established shackles of traditional stock exchanges, government regulation and the institutional and corporate stranglehold, and reinvent the process so that it is something that is accessible to all.

There will be no more stock exchanges or trading through middlemen. No more expensive, exaggerated fees and slow clearing processes that can take days, not just hours. By using blockchain technology to revolutionise the way people all buy and sell shares, a global equity market that is worth US$76 trillion can truly be unlocked and offer its businesses and investors unlimited benefits, compared to its current state.

The adoption of blockchain can create a more reliable equity market that will unleash new levels of efficiency, innovation and security; bringing the equity market firmly into the 21st century.


Sourced by Sascha Ragtschaa, CEO and co-founder of Chainium

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Nick Ismail

Nick Ismail is a former editor for Information Age (from 2018 to 2022) before moving on to become Global Head of Brand Journalism at HCLTech. He has a particular interest in smart technologies, AI and...