Analogy helps in transmitting significance
of a concept to the reader which hitherto may have been overlooked. Here the case
in point is influence of Blockchain in securities trading.
Defining Blockchain (Fortune
Magazine):
“…..the blockchain is actually a way to structure data, and the
foundation of cryptocurrencies like Bitcoin. This coding breakthrough—which
consists of concatenated blocks of transactions—allows competitors to share a
digital ledger across a network of computers without need for a central
authority. No single party has the power to tamper with the records: the math
keeps everyone honest.”
Now coming back to impact of
Blockchain in securities trading, I will reproduce a section from the article “The
Truth About Blockchain” by Marco Iansiti and Karim R. Lakhani (HBR
January-February 2017 Issue”:
“For example, a typical stock transaction can be executed within
microseconds, often without human intervention. However, the settlement—the
ownership transfer of the stock—can take as long as a week. That’s because the
parties have no access to each other’s ledgers and can’t automatically verify
that the assets are in fact owned and can be transferred. Instead a series of
intermediaries act as guarantors of assets as the record of the transaction
traverses organizations and the ledgers are individually updated.
In a blockchain system,
the ledger is replicated in a large number of identical databases, each hosted
and maintained by an interested party. When changes are entered in one copy,
all the other copies are simultaneously updated. So as transactions occur,
records of the value and assets exchanged are permanently entered in all
ledgers. There is no need for third-party intermediaries to verify or transfer
ownership. If a stock transaction took place on a blockchain-based system, it
would be settled within seconds, securely and verifiably. (The infamous hacks
that have hit bitcoin exchanges exposed weaknesses not in the blockchain itself
but in separate systems linked to parties using the blockchain.)”.
The above example is an
indication with respect to impact of Blockchain in completion of a transaction in a swift and reliable mode.
Reference:
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