Nasdaq to introduce blockchain for private equities
Greifeld: the blockchain is the ‘natural evolution’ of the market
Nasdaq is to use the blockchain technology behind controversial alternative currency Bitcoin, as part of a push to improve the exchange’s equity management abilities. The move is the first time a major global exchange has put the blockchain concept to use.
The word ‘blockchain’ was first made familiar to many people when Bitcoin emerged into the mainstream public consciousness in 2013. A blockchain is a public ledger or transaction database that digitally records every transaction ever executed. According to London-based consultancy Z/Yen, every new block of transactions “contains a hash of the previous block, creating a chain of blocks from the ‘genesis’ block to the current block”.
What Nasdaq plans to do is to use this blockchain concept to support its equity issuance, transfer and management abilities. Fredrik Voss, a Nasdaq vice president who has been tasked with being an “evangelist” for the blockchain within Nasdaq. By using a blockchain, Nasdaq believes it will be better able to audit its business and keep robust records of all transactions. To that end, it has built the Open Assets Protocol, which is built on the blockchain, as a digital ledger to support its Nasdaq private market platform.
“Our initial application of Nasdaq’s blockchain technology-enabled offering will modernise, streamline and secure typically cumbersome administrative functions, and will simplify the overwhelming challenges private companies face with manual ledger record-keeping,” said Bob Greifeld, chief executive at Nasdaq.
“Using the blockchain is a natural digital evolution for managing physical securities, “ he added. “Once you cut the apron strings of need for the physical, the opportunities we can envision blockchain providing stand to benefit not only our clients, but the broader global capital markets.”
Nasdaq’s use of the blockchain represents what many industry observers see as the biggest legacy of Bitcoin – not so much the currency itself, but instead the digital blockchain concept behind it. As Z/Yen put it earlier this year: “For many people the big story is not Bitcoin, rather it’s the blockchain technology that makes tens of crypto currencies work. Working since 2009, forged in a global furnace of libertarian money, trade, avarice, criminality, espionage and law enforcement, Bitcoin and other crypto currency experiments provide increasing confidence that blockchains are robust in harsh environments and have a bright future.”
