Blockchain technology has already transformed the future of finance, money, record-keeping, supply chain management, and more. Blockchain doesn’t only support cryptocurrencies like Ethereum and Bitcoin, but it can also help in transforming the process of storing and transmitting financial data across the globe and also the stock trading marketplaces.
While the adoption of blockchain
technology is relatively new within the realm of stock market trading, the
global stock market indicates that it has the potential to impact the stock
market like the way it has affected currencies.
ASX, Nasdaq, the Deutsche Bourse,
Securities Exchange Board of India, Tokyo’s Stock Exchange, and New York’s Stock
Exchange, to name a few, have either allotted commissions to determine the
viability of adopting blockchain technology in the future or have already begun
applying blockchain technology for their transactions.
Blockchain Technology: What Is It?
Blockchain technology refers to a virtual
storage method wherein different individual data is interlinked with one
another. The resulting accumulation of information resembles a long chain,
which is almost impossible to be stolen or altered without being identified.
This offers those who adopt blockchain an assurance that their data is safe.
Blockchain Technology in Stock Markets
Perhaps the most lucrative way
blockchain technology can be utilized within stock markets is for accelerating
the process of trade settlement. Stock market regulators, brokers, and traders
generally go through a tedious and expensive process which takes about three or
more days to complete transactions. This long process is due to operational
trade clearance, intermediaries, and regulatory processes.
A smart contract combined with
blockchain technology can help get past the bureaucratic red tap quickly and
speed up the settlement process, thereby making it less expensive than before.
Blockchain Technology in Core Finance
It’s not just stock trade settlements
that are affected by blockchain technology. It can also be used for asset
management and fundraising, and also help with margin financing, post-trade
settlements,monitoring systematic risks, and tracking securities landing.
Finally, it helps in reducing costs
imposed on customers, and in certain cases, completely remove the need to have
a middleman. It reduces operational risks and counter-parties while offering
the groundwork for efficient trade settlement.
Consequently, this promotes
transparency and fairness since the information is available for all network
participants to view. Also, with smart contracts, trade exchanges could have
built-in characteristics to block, track, and report illegitimate actions taken
by anyone within the network.
Blockchain Technology in Healthcare
The healthcare sector deals with
critical data which is generated regularly. The information is scattered and
spread across multiple systems within the ecosystem of healthcare. Due to
inadequate data storage, mismanagement, and access facilities, healthcare
professionals often find it difficult to access medical data when needed.
Plus, the possibility of data loss
and theft also adds to the predicament of healthcare providers. However, with
blockchain, health data is managed by its users while being accessible only
when authorized for the same. The use of blockchain in healthcare can help in streamlining
the record-keeping process as well as providing adequate data
storage.
Blockchain can also help in
simplifying the billing process, securing patient data, ensuring consent on
data usage, and streamlining patient data management.
Bottom Line
As with any new technology,
blockchain is not without risks and challenges. It could lead to regulatory and
legal challenges, which the financial market, governments and the regulators will
have to overcome. It can also bring risks of maintaining security standards and
scalability.
Despite all these, it’s reasonable to
predict that the blockchain technology will undergo a similar process like the
internet itself since the 1990’s up till today. That said, blockchain has the
feasibility to transform societies, governments,a nd companies for the better,
and also provide investment opportunities for traders who can identify the
ideal companies.