The prime purpose of Blockchain technology is to develop an accounting technique for Bitcoin, the virtual money that was launched in 2009. In the previous decade, the blockchain has formed into an option that is more prominent than anticipated, as it is being utilized and experimented in a wide range of sectors and is quickly disrupting several industries, one among them is the trading sector.
Qualities Making blockchain suitable for Trading?
A blockchain technology is a digitalized, decentralized, and distributed cloud-based digital ledger of every transaction, which makes use of the proof of concept method to validate transactions. This technology is based on a complex mathematical equation which takes a considerable amount of energy and time for even the smartest system to solve. The blockchain is perfectly fit for trading and finance sector as every node is aware of the source information that came from and where it is going to be transferred. Some of the unique characteristics of Blockchain are:
1. All data exchange/ transaction is verifiable and unique
2. All transactions are untraceable, secure, and private
How does it work?
Every time data enters from one node, the proof of concept algorithm will be executed, thus guaranteeing the integrity of the data traveling on the network.
Requisite of Smart Contract?
Smart Contracts are the center of Blockchain technology. The smart contract is an arrangement of codes that will enable the two sides to trade cash or other values in a secure, transparent and trustable route. As mentioned above, the data travels from node to node utilizing the proof of concept to approve the flow. As the mediators’ intervention get limited, the costs associated with them also lessen, and at times they even get eliminated.
Qualities of Blockchain:
1. As a decentralized system, blockchain technology lets the involved parties set up any sort of agreement without the need of any middleman, including legal advisors, accountants, employees, organizations.
2. Blockchain provides an opportunity to control self-verifying and self-executing exchanges and enables the parties to chop down mediators. This technology has been especially valuable in the financial sector, contributing to the trading activity specifically.
3. Blockchain technology significantly improves the trading stocks, as well as in different securities, by accelerating the procedures, expanding the traceability of their provenance and encouraging the accessibility of the records.
4. Blockchain technology can track and screen progressively any development and activity. The customary methods for checking transactions becomes needless, as, if abnormal activities may happen, the system would have the capacity to block it and report it to the concerned parties, guaranteeing the security of the framework and the robustness of the platform.
Procedures of stock trading
1. Order placing to either purchase or sale of a specified amount of securities for a particular price
2. Order completion based on requirements
3. Preparation on contract note by the middleman
4. Delivery/clearing of shares
5. Settlement of the securities
The Procedure of Stock Trading After AI
The new digitalized tasks could supplant a bulk amount of printed and other materials. The control can be brought back in the concerned parties’ hands, and this can automate the procedure, diminish unnecessary materials, democratize the exchange activities and avoid fraudulent activities, that have been a delicate issue before. Exchanges can be settled by peer confirmation.
AI Trading will construct a blockchain wallet in each merchant’s record and will give a new exchanging experience. You can do all tasks including order placing, selling, buying, bidding in a completely secured method.
Examples of Blockchain application
The principal use of blockchain in the trading sector was seen in May 2015 when NASDAQ launched Linq. It is a blockchain private trading medium that would enable privately owned businesses to carefully represent their share possessions, despite the fact that they are not listed on a stock exchange. The framework figured out how to effectively complete and record a private-securities exchange to a private investor and, from that point, blockchain has been highlighting a few different activities not just by NASDAQ, that has collaborated with banks like Citi and SEB to develop new payment solution and mutual fund trading platform, also by other stock trades across countries.