Wall Street Adopts Blockchain Technology to Record Trades
Wall Street’s interest in blockchain is because “it allows information to be recorded in real time without the bottleneck that central authorities generally introduce” and that decentralization “also makes it harder for attackers, or hackers, to take control of the network.” Rather than actually use Bitcoin’s blockchain, the DTCC will use a distributed ledger, which is similar to blockchain but only open to invited participants.
Bodson notes that the distributed ledger will provide “one version of the truth that everyone shares and everyone utilizes.” The new software will replace the Trade Information Warehouse that records all the credit default swap trades, “essentially bets on the success of bonds,” which “played a major role in the 2008 financial crisis.”
Bloomberg reports that China is the venue for high-speed bitcoin trading. Although Chinese banks were banned from trading bitcoin in 2013, “zero transaction costs on Chinese venues that host most of the world’s turnover, round-the-clock trading” make it a popular spot, along with “co-location services allowing participants to place their servers right next to those of the exchange.”
Founder of China’s “largest platform for facilitating automated bitcoin strategies” Chen Zhenguo says he is making “annualized gains of 50 percent for his own account,” but wouldn’t provide details to verify the claim. The risks are cyberattacks and extreme price swings, which have “deterred some high-speed firms,” as well as “growing concern over a regulatory crackdown in China.”
See the full story here: http://www.etcentric.org/wall-street-adopts-blockchain-technology-to-record-trades/