The London Stock Exchange to Use the Blockchain: The Next Digital Breakthrough?
The world’s stock markets have been operating online for a number of years now, but it’s still commonly regarded as being a fairly traditional environment that has changed less than most industries in this era of digital transformation and disruptive innovation strategies. This is why the news that the London Stock Exchange (LSE) is considering using the blockchain is so important, but what does it really mean?
A Look at the Digital Transformation Process
Stock market trading has also undergone a degree of digital transformation, meaning that investors can now follow real-time price trends, analyse the markets and make their moves online. This has led to a new type of investor, who uses their knowledge of technology and social media together with their willingness to learn new skills as they look for under-valued shares to invest in.
The process of going online has also deeply changed other industries, as we can see by looking at the casino business. Online casinos provide a huge range of varied games, with the latest technology used to provide features such as free spins, bonus rounds and jackpots. The casino sign up bonus offers such as free spins and bonus funds let new players try this way of playing without using too much of their own money as stakes.
The blockchain has become an integral part of the transformation in several other industries. Examples include the transportation sector, where logging items in this way ensures a transparent supply chain that can’t be tampered with. We’ve also seen how the blockchain is being put to good use in disruptive projects in industries such as banking, healthcare and entertainment.
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How Will the Blockchain Power the LSE?
A report on this innovation stressed that the LSE won’t be allowing cryptocurrencies to be traded by their users. Instead, the stock exchange’s plans involve using blockchain technology to make the trading of traditional assets more efficient as part of an end-to-end digital market ecosystem that makes it easier to raise and transfer capital.
Murray Ross is the Head of Capital Markets for the LSE Group, and he pointed out that using the blockchain in this way could make their processes “slicker, smoother, cheaper and more transparent”. He also confirmed that they would be looking to regulate these processes.
The fact that the blockchain is an immutable ledger should mean that it adds a greater level of confidence and transparency to the stock market, just as it has done for those examples we looked at earlier.
In the financial world, it’s already been used by JPMorgan to carry out foreign banking settlements and by HSBC, which uses a custody blockchain platform as a form of digital vault.
The LSE is far from being the first company to find ways to introduce the blockchain as a way of making their digital transformation more complete. We’ll need to wait for the exact details of the changes, but it’s unlikely to be the only way that the blockchain will be incorporated into traditional investing in the next few years.
