Bitcoin and blockchain technology are making headway on the Nasdaq exchange, one of the largest financial trading markets to date. That statement was reinforced by the launch of two trading platforms for smart contracts on the same day. Both Overstock.com and Symbiont want to make issuing and trading debt instruments more convenient and secure.
Smart Contracts = Smart Secure Trading
The way a smart contract works is similar to regular contracts, except there is no third party involved nor is there a human element to take into account. As we all know whenever there is a human element involved in a decision, the chances of influencing and corrupting that individual are quite real.
Bitcoin has evolved from a financial investment vehicle – although many people still view it that way – into a fully-fledged financial technology innovation. However, it is the first time a blockchain technology-based platform is to directly target services available in the existing financial world. Despite Bitcoin’s moniker of being “disruptive”, there is also plenty of room to peacefully coexist with traditional financial services.
What makes the launch of both Overstock.com Symbiont’s smart contract trading platform so interesting is that both parties are planning to license out their technology to other parties. Up until two years ago, Bitcoin was pictured as the “magic internet money that wants to do its own thing”. Engineers, developers, and industry experts quickly came to the realization that, standing on its own, blockchain technology would be the way forward, with or without Bitcoin.
Symbiont’s platform called Smart Securities, wants to bring down counterparty risk to zero, or as close to it as humanly possible. During a small trading test, which took roughly 10 minutes to clear, debt securities issued by SenaHill Partners had cleared without a hitch or glitch. Overall, the small audience witnessing this live demo seemed very enthusiastic about the possibilities this platform could bring to the financial sector.
Later that day, Overstock.com CEO Patrick Byrne unveiled t0.com, the company’s spin on a smart contract trading platform. No demo of the platform was presented, as this was only meant as an introductory speech regarding the platform itself and how it can be beneficial to the financial sector.
Targeting One of The Most Outdated Financial Businesses
Both Overstock.com and Symbiont presented their smart contract trading platforms as a way to bring financial innovation to the settlement business. There is a very good reason why both companies want to target this sector, as it could stand to benefit most from Fintech firms and cutting-edge services to revamp the entire ecosystem.
In fact, the settlement business is one of the most inefficient and outdated systems of our entire financial infrastructure. Most of the elements making up the settlement business have not seen any major innovation in the past 150 years. Smart contract trading platforms are here to change that, for the benefit of everyone involved.
Blockchain technology and Bitcoin present much faster transactions: 10 minutes versus three days. On top of that, the costs associated with smart contract trading platforms are much lower compared to the current system. Last but not last, smart contracts have the potential to increase investor confidence in products of which the underlying assets are completely transparent.
Source: Washington Journal
Images courtesy of Overstock.com, Symbiont, and Shutterstock