Introduction
Blockchain technologies, ever since their invention in 2008, have caught the eyes of investors across the world. Speculators have poured billions of dollars into blockchain stocks and investments, changing the stock market every day. However, the blockchain’s impact on the stock market goes beyond this. Blockchain technology has the potential to revolutionize the stock market entirely.
How will blockchain affect the market?
Reduced Settlement Delays
The market today endures a trade settlement process that takes days to process a transaction. This is largely due to the abundance of “middlemen” along the process, as various regulators and intermediaries track the trade before settlement. Traders, due to these settlement times, must either trade on margin or have a significantly limited trade volume. By utilizing the blockchain, the extended periods of delay would be shrunk significantly, likely going from days to minutes. Further, if the lightning network is applied to the blockchain, the settlement times can be decreased even further, likely to just a few seconds. This would allow traders to make more trades in a shorter period of time, ultimately increasing liquidity in the market.
Reduced Commissions
High fees and brokerage commissions take a tool on an investor's profits, likely making them less willing to trade and reducing liquidity. The high commissions are in part due to the time-consuming audit process for trades. However, since the blockchain is a public ledger, these audit times would be dramatically reduced, lowering the costs a brokerage must take. This, then, would likely transfer to investors who would pay lower fees on their transitions.
Dividends
Many investors utilize a trading or investing system largely centered around the receiving of dividends. However, one huge problem with these today is the time it takes for the dividends to be processed, recorded, and then sent to the trader's accounts. This process takes weeks and rallies a high cost of companies. With the blockchain, companies can create self-executing payments through smart contracts that will send dividends and a reduced cost and speed.
Capital Management
Companies looking to gain some capital from investors often have to look to middlemen and endure a long and expensive fundraising process. By making this process be blockchain-based, companies will be able to raise a track capital with ease, as opposed to the current process. This would allow the business to grow and thus the economy to grow as a whole.
Conclusion
The blockchain has seemingly unlimited potential, with benefits spanning across various industries. Block 11 realizes this potential and has vowed to seize any opportunity in the blockchain space, including those specializing in Lightning Network blockchain solutions.
Sources
https://www.disruptordaily.com/blockchain-use-cases-stock-trading/
https://www.investors.com/news/technology/blockchain-technology-blockchain-stock-market-revolution/
