Amir Tabch, Securrency Capital’s Senior Executive Officer, wrote this article about blockchain in Economy Middle East.
Within a span of a few short years, blockchain technology has become the premier method for faster payment services, automating contract enforcement, and securely storing and transferring data. This should come as no surprise given the fact that blockchain technology increases trust, security, transparency and traceability, making it the world’s safest vault.
NASDAQ made its first securities transaction using a blockchain in 2015, back when the world was still debating blockchain’s scope and security. This is because the advantages of trading on blockchain were already obvious. They include:
- Built-in compliance: Security tokens on the blockchain can verify that a transaction follows the applicable regulation(s).
- Increased liquidity: Because tokenization permits less than one whole unit of a security to be bought or sold, investors can enter the market at a lower cost, thus expanding the investor pool and making these assets more liquid.
- Greater geographic diversity: By automating cross-border compliance, blockchain alleviates the burdensome process that currently hinders global securities trade.
- Reduced costs: Securities trading requires a lot of human intervention for steps like settling, allocating and closing the transaction, all of which cost resources. Blockchains can complete these tasks quickly with built-in “smart contracts” – computer code that automatically executes if certain conditions are met. Proof of payment, stock transfers and calculating stock prices in real time can all be streamlined by using “smart contracts.”
- Instant settlement: Instead of waiting days, securities can be settled within minutes, lowering risk and overhead costs.
Read more at Economy Middle East.