Nasdaq announced the bitcoin startup Chain to be the first company to trade shares on Nasdaq Private Market.
The New York-based stock exchange, Nasdaq announced its plans to incorporate the blockchain into its operations in May. The ledger technology will become available on Nasdaq Private Market (NPM), an exchange launched in January 2014 to handle pre-IPO trading among private companies.
Chain, a company located in San Francisco, provides bitcoin infrastructure including asset management platform for entrepreneurs and financial institutions. Last year Chain closed a $9.5M round of funding led by Khosla Ventures.
Nasdaq is planning to start the pilot later this year and Chain will be the first entity to start finalising settlements and keeping share records through blockchain.
“We would rather have the blockchain manage our shares than our lawyers – and God bless them, we love them, but they’re expensive - and I am sick of poking around Excel trying to figure out who owns what,” said Chain CEO Adam Ludwin.
“It currently costs a lot of money to make sure there are no mistakes, even when you’re using [software], because there are human factors involved in the transfer, recording and valuation work around securities,” he added.
As Coinfox reported earlier, Nasdaq believes in the blockchain’s enormous potential of eliminating all paperwork and cutting out the intermediaries (such as lawyers) in share trading. 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 used to automate the transaction verification. The contracts would be signed cryptographically and the rights transferred instantly via blockchain.