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Stock Trading on Blockchain; an Emerging Space
Stock Trading on Blockchain; an Emerging Space
A disruptive technology, blockchain, the underlying system behind cryptocurrencies, is disrupting the finance, supply chain, healthcare, management, and record-keeping industries. Besides being the framework on which these digital currencies are built, blockchain has the potential to revolutionize the stock market.
According to a 2018 Forbes article, blockchain could come in handy in the stock market, especially in the case of expediting trade settlements. Ordinarily, stock traders, regulators, and brokers would have to go through a cumbersome process which usually takes days, to complete transactions and this is simply because of the many intermediaries, regulatory policies, and trade clearances. Through decentralization and automation, the core tenets on which the technology is built, blockchain could revamp the conservative and rigid stock market.
Additionally, blockchain could aid in asset management, fundraising, margin financing, tracking securities, post-trade settlements, and systematic risk monitoring.
How Blockchain Could Improve the Stock TradingWith the stock market currently worth over $70 trillion, there's still a ton of potential for growth in the market. The integration of advanced technologies like blockchain could put the market on a higher pedestal.
A ton of crypto projects have been launched to enable traders to efficiently segue to stock trading via blockchain. Besides a few nascent trends, stock trading on blockchain is gradually becoming one of the biggest fads in the crypto scene.
The influx of these protocols will mean one thing — a paradigm shift in how trades and payments are settled in the market.
Through blockchain technology, these emerging projects will offer a ton of advantages, some of which include low fees, higher interests, faster payments, etc.
Lower feesFor a long time, one of the major sticking points of the stock market is the cost of entry.
This creates an entry barrier for prospective low-income investors seeking to get in on the market. Presently, most brokerage firms charge as high as $7 to $10 for each trade. For a $1000 trade, you may have to pay as much as $20 for your buy and sell order. More trades would mean more money. These crypto projects, leveraging blockchain’s immutable, transparent, and low-cost technology will greatly reduce the cost of trades, shattering to pieces the century-long entry barrier.
In addition to reducing costs, blockchain technology will offer easy access to the trillion-dollar stock market.
High interestsLow interests have been identified as one of the major problems of the stock market. By eliminating middlemen that charge exorbitant commissions to process trades, these projects through blockchain technology will guarantee higher interest rates and dividends.
24-hour tradingIn the United States, the stock market opens at 9:30 AM and closes at 4 PM, a major problem for traders, especially those in varying time zones. Integrating blockchain into this market will guarantee unlimited trading, regardless of your location.
No KYC requiredThe increasing number of middlemen, regulatory policies, and membership requirements all make the entry process a tad bit cumbersome.
With a reputation for eliminating middlemen and paperwork, the integration of blockchain into the stock market will offer prospective traders free and easy access to the market. No Know-Your-Customer [KYC] forms are required.
The Twindex ProtocolWhile a few protocols have been designed to enable the seamless transition to stock trading via blockchain, Twindex is surprisingly one of the foremost. A decentralized exchange, this protocol was created to enable investors to trade synthetic assets pegged to real-world prices on the Binance Smart Chain [BSC].
Utilizing BSC’s unique properties, Twindex will offer faster and cheaper trades, payment settlements, asset management, etc. The decentralized exchange will deliver a higher annual percentage rate [APR], solving the problem of low interests and dividends.
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