Earlier this month, the Nasdaq announced it was testing the blockchain technology for trading shares in private companies, known as colored coins.The block chain is capable of holding more information than just details of bitcoin transactions, a feature that Nasdaq is planning to use in its systems.The company will be creating "colored coins" and appending special information to the block chain which will indicate that a particular fraction of a particular bitcoin can be redeemed as per the terms written into it.The colored coin can then be passed around just like a normal bitcoin, while storing a record of who owns the asset it is connected to.
The Nasdaq reveals to the Financial Times that it plans to increase the number of experiences with the blockchain technology.The New York Technology Exchange intends to start four trials of the public ledger in trade processing in the next year.The CEO, Bob Greifeld believes this technology could resahpe the US trading market.Mr Greifeld explained to the Financial Times that he wished the Nasdaq to become “a leader in the field”.
Shortening Trading SettlementsBob Greifeld added “I am a big believer in the ability of blockchain technology to effect fundamental change in the infrastructure of the financial services industry.He declared the decentralized network could strongly reduce the time, it takes to deal US securities, currently a maximum of three days (T+3).Clearing houses are a wonderful invention, but if you have a public ledger that is trusted, you can evolve back to a bilateral (trading) world but proceed with instantaneous settlement.We currently settle at T+3.
Why not settle in 5-10 minutes?”Reducing the trading settlement times represents a major advantage for the parties, preventing against default of payment and the need for collateral or insurance.Using the blockchain will help digitize, record, track and update the transactions from paper certificates to an audited private securities.In addition, the New York Stock Exchange is also turning to Bitcoin, as it launched the first exchange-calculated and distributed bitcoin index, after having invested in Coinbase in last january.
