In the last couple of months, banks and other financial institutions have shown a growing interest in bitcoin and its underlying technology, the blockchain. In fact, NASDAQ has recently reported making their first share sale transaction with the help of the technology.
For those who are not yet aware, the blockchain is basically a public ledger which records and transmits a series of digital events, while also using cryptography to verify blocks of data. Once this is done, they are then distributed among the parties, thus enabling transactions to take place, be verified and relayed. Perhaps one of the main benefits of the system is the fact that transactions take place nearly simultaneously, instead of requiring people to wait for hours or days. Together with this, all afferent data is stored publicly, where it can be verified by anyone interested.
According to the firm, NASDAQ used its very own blockchain-powered system, Linq, in order to allow a firm known by the name of Chain to sell some of their shares to an unknown technology investor in the United States. As the firm trumpeted over and over with this achievement, some people tend to believe that it represents PR for the exchange, rather than an actual milestone. In fact, a scuffle was raised over who the first company to make a sale using the blockchain was.
Based on this, there have been several reports pointing out that in September, Digital Asset Holdings, a firm formerly led by the well-known JPMorgan used the platform to allow Pivit to distribute some of its shares to various investors. However, a NASDAQ spokesman stated that: “This is the first-ever private securities issuance documented with blockchain technology and we stand by this view”.
Regardless of this, as the blockchain promises to also greatly cut on the administrative costs and bureaucracy needed for transactions at this moment in time, the share sale is indeed a milestone, as it further proves that the blockchain can be relied on for these types of transactions. While NASDAQ’s blockchain technology also looks like a tech firm testing its product, it also supports claims that share and stock trading would be better off using the technology.
Based on everything that has been outlined so far, this share sale will likely encourage other companies experimenting with the blockchain to conduct public sales, and see how these are received by the market. As the technology has great potential to cut down on security settlement times and costs, it’s no wonder why so many firms are experimenting with it.
What do you personally think about NASDAQ’s claim? Is it a milestone, or just a PR effort? Let us know your thoughts in the comment section below.