The latest target for blockchain disruption is options trading tied to the Standard & Poor's 500 Index, the main benchmark for U.S. stocks.
Under the current setup, Wall Street firms typically execute the trades and handle the settlement afterward - essentially making sure the securities end up in the buyer's account, and that the cash ends up with the seller.
A startup specializing in analytical tools for the crypto industry, says he came up with the idea of using the bitcoin blockchain - the decentralized computer network underpinning the decade-old cryptocurrency - to trade S&P 500 options.
Crypto Garage has developed an expertise in smart contracts, small strings of programming that can be encoded into the bitcoin blockchain to run when activated.
The transaction needed to cross on the bitcoin blockchain, Goh said, because it's the most secure in the industry, even though smart contracts are generally considered easier to program on the ethereum network.
Paid an option premium of 0.0202 bitcoin via the smart contract, and Crypto Garage posted 0.04667 bitcoin as collateral.
Above is an image produced with data from the bitcoin blockchain - the trade settlement, at expiry.
In yellow, on the lower right, it shows that the transaction was confirmed 2068 times by the blockchain and then the yellow number of bitcoin is the total BTC proceeds distributed to the two counterparties from the collateral, after deducting the fees.
Could the new process be scaled up to handle the volume of S&P options trades currently handled by securities firms? Probably not without improvements to the bitcoin blockchain's processing capacity, Goh says.
The little $217 options trade might be a step forward in making financial markets cheaper and faster to use - with less Wall Street involvement.
Tiny $217 Options Trade on Bitcoin Blockchain Could Be Wall Street's Death Knell
Publicado en Oct 8, 2019
by Coindesk | Publicado en Coinage
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