Everyone who was ever interested in buying stock knows of the London’s Stock Exchange — one of the oldest and best-known stock exchanges in the world. The stock exchange is over 300 years old, and for a long time, it was resilient to all kinds of troubles and issues that struck the world.
Now, however, with the modern age bringing new technologies such as the blockchain — the LSE might have to experience change. There were already some hints at that, especially when it comes to the stock exchange’s CEO, Nikhil Rathi, who mentioned recently that the blockchain technology could be useful in the UK’s stock market.
Blockchain technology awakening interest
Blockchain is a technology capable of recording data across a distributed network of independent computers, known as nodes. They keep the network going instead of a centralized server, thus making it completely decentralized, immutable, and transparent to all participants. As such, the technology is already considered perfect for recording vital information which needs to remain unaffected and pure.
Rathi believes that this type of solution would work excellently in the stock exchange, in settlements, for example. While the new technologies also brought new markets, Rathi admitted that there was an interesting array of various ideas, that was noted from rivaling venues.
While there has yet to be seen which of the innovative new technologies and ideas will gain market traction, distributed ledger definitely seems to have attracted a lot of interest. Other entities in the stock market have noticed it as well, and some, such as Switzerland’s SIX exchange, are even preparing to launch their own platforms based on blockchain technology.
Their goal is to improve the trading process by making it faster. Then, there is the Gibraltar Stock Exchange, which has already launched digital versions of securities. Now, it appears that London’s Stock Exchange might be making a similar move soon. After all, London’s market venue did recently buy a minority stake in a firm known as Nivaura, which allegedly has the first automated crypto-denominated bond in the world.
The London’s Stock Exchange has been doing its own tests ever since, such as testing issuance, admission, as well as trading of equities with Nivaura. However, it appears that it is still too early to tell whether or not this technology will be deployed in a real market environment anytime soon.
Blockchain is interesting, but crypto is still heavily avoided
As mentioned, the LSE is far from being the only one to see the potential benefits of introducing blockchain technology in traditional markets. Many financial companies are considering the same, whether only to see potential implications of such a move, or if they are actually preparing to ‘go blockchain.’
Of course, this still does not mean that many of them would be interested in approaching anywhere near actual cryptocurrencies. While the blockchain was created to serve as an underlying technology for Bitcoin, these companies are still extremely cautious when it comes to digital currencies.
JP Morgan is one example of a bank that found blockchain very interesting, but it is not interested in using any existing cryptocurrency. Instead, the bank is planning to launch its own coin — JPM Coin — which is supposed to serve as a type of a stablecoin. Even this is highly unusual, especially since the bank’s CEO, Jamie Dimon, always criticized cryptos and has called them a fraud.
As for Rathi, he welcomes competition and innovation alike, and he believes that there is a lot of beneficial techniques that can be found in the crypto space and used for bettering traditional markets. However, since the crypto space had seen some ‘extreme manifestations,’ he still believes that it is more than necessary to remain cautious if dealing with it.