New York-based stock exchange, Nasdaq announced its plans to incorporate the technology behind bitcoin into its operations. Blockchain, the public ledger that keeps track of all bitcoin transactions around the world, can be useful for any global financial institution, decided Nasdaq.

“Utilizing the blockchain is a natural digital evolution for managing physical securities,” said Nasdaq’s CEO Robert Greifeld. He said the technology held the potential “to benefit not only our clients, but the broader global capital markets”.

In addition to keeping track of all bitcoin transactions, the blockchain technology has an enormous potential for other niches in the world of finance, with one of the huge benefits of blockchain for any institution being precisely that, cutting out the middle man. In the case of Nasdaq — the army of lawyers and intermediaries alike.

If the experiment turns out to be a success, Nasdaq may use the blockchain technology in its stock market operations and financial assets trading. The core technology of the digital currencies commerce will be employed to automate the process of verifying the transactions. The contracts would be signed cryptographically and the rights transferred in a blink of an eye via blockchain. The first to get a taste of the technology behind bitcoin is Nasdaq Private Market, an exchange launched in January 2014 to handle pre-IPO trading among private companies.

Although Nasdaq experts seem to be positive about the initiative, the security issues have yet to be tackled, the most important one being — will the blockchain be able to withstand significant volumes of transaction data?

The history of relationship between Nasdaq and bitcoin is a long and complicated one. Recently the Sweden-based regulated exchange Nasdaq Stockholm has welcomed the first ever bitcoin-based security, Bitcoin Tracker One (BTO) that will be admitted to trading on 18 May. Previously Nasdaq OMX Group Inc. has formed a partnership with a New York-based bitcoin start-up Noble Markets to power a new marketplace aimed at allowing companies and institutional investors such as hedge funds to trade bitcoin and related digital-currency assets.

 

Tatiana Ilyina