The market evolves rapidly over time, and its dynamics continue to change as society advances. If you are familiar with the financial industry – which includes banking and investments – you might have seen the booming interest for blockchain when the technology was first introduced to the market. Mainly, the concept of blockchain involves blocks, or digital information, stored into a chain, a public database.
Given the potential of blockchain technologies, the financial market in different parts of the world has adopted an innovative concept. The equity market of Australia, in particular, has warmly welcomed the technology, which explains why you may find several ASX blockchain companies today.
The potential of blockchain technology brings to light questions about the future of stock trading. Though the concept may still be relatively new, its positive impact cannot be denied, especially with the reception of the ASX towards the blockchain technology. Even in its early stages, blockchain technology has managed to disrupt the financial industry and present many opportunities for its growth.
Quicker Settlements through Automation
Stock trades may happen quickly, but the settlement process tends to slow down the entire transaction. If you are an active participant in the stock market, you would be familiar with the tedious settlements that can take days to process due to different regulations and intermediaries.
With blockchain technology, the processes involved in stock exchanges can be automated, effectively cutting down the settlement time. Since the database will no longer be centralized, network participants can directly communicate with each other and settle transactions. As a stock trader, you will also be able to track risks and securities better after you have settled your trades.
Transparency through Decentralisation
With a blockchain system, companies are decentralizing and operating without a single authority. Consequently, the trading system can be more transparent and secure, allowing you to see the ledger of transactions. This factor may be one of the reasons why several ASX blockchain companies are emerging and adopting the technology.
Aside from this, the way blockchain technology works are that you will be unable to change data recorded in a block without changing the data from all the blocks that came after it. Doing so would virtually be impossible since by then, participants of the network would have already seen the data. Given the standardized protocols and processes, you are assured that the entire network shares a single source of information.
Streamlined Financial Services
Aside from efficiency and transparency, transformation is one of the core impacts of blockchain companies. The technology ultimately aims to streamline financial services to make it easier for investors to participate in the stock market. Likewise, companies will be able to benefit greatly since the automation will help them significantly reduce their costs.
The blockchain technology does not have a significant impact on the stock exchange only but also in the entire finance industry. It also allows companies to scale up since they will be able to sustain hundreds of transactions in a short time and expand their reach to access the global markets.
As technologies continue to evolve, financial companies look towards innovative solutions to improve the efficiency and productivity of their services. With the stock market, in particular, blockchain technologies will help encourage more participants and investors. This shift will not only benefit individuals but also boost the economy due to the performance of the stock exchange.