While most of us are left wondering if bitcoin will ever really catch on, others are beginning to realize the vast potential of blockchain, the technology which made bitcoin possible. Blockchain uses a complicated computer algorithm to automate transactions and ensure complete digital records in the stock exchange. If bankers at Nasdaq have their way, the technology will soon make trading their stocks more efficient and reliable.
Specifically, the Nasdaq Private Market is responsible for trading before a company goes public with an IPO. If blockchain does what it’s supposed to do, it stands to reason that we may see a small stock exchange revolution in the coming months.
What does this mean for the future of the stock exchange?
Trust in the stock exchange is volatile. Part of the reason for this decision is based on the need for greater transparency, something on which investors rely in order to make fair, accurate decisions about where they place their money.
This is especially crucial before a business goes public. Most trading done during this period historically involves a group of people who represent the company’s most important figures–not the public. Blockchain bolsters trust by replacing the human middleman with a more trustworthy computer system.
A company will now know who owns or trades its stock, and be able to more easily audit or track those trades.
None of this means that bitcoin is making a comeback, although it represents the first time that the technology behind its groundbreaking digital coin experiment is accepted for what it is: accessible, secure, undeveloped and unrealized.
James Angel, a professor of finance at Georgetown University, says it best. He believes that bitcoin, for all its many flaws, is the MySpace of the banking world. It may not play a role in the present, but it built the foundation for the future of the stock exchange–just as MySpace did for Facebook.
Not everyone thinks that technology like blockchain and bitcoin will have such a small impact. Check out this presentation by Rick Falkvinge about how it could shape history for decades.