Thanks to technological innovations, increasing competition, and changing industry dynamics, the financial market today seems to be in a constant state of flux. We have witnessed the sea level of change in the financial industry as it has come the long way from the introduction of a first credit card in the 1950s to the evolution of cryptocurrency and blockchain technology being the latest one.
Changing Stock Market Scenario
Stock markets are widely considered as a backbone of any nation’s financial infrastructure. They depict the economic health of the country and thanks to the evolution of blockchain technology; today stock markets are undergoing a massive revolution. More and more markets around the globe are digitizing their traditional assets and including digital assets such as cryptocurrency in their trading portfolio. These trends are slowly revolutionizing capital markets which are indeed in the interest of all the stakeholders involved in the process. Use of blockchain has made sure that safety and security of the transaction take the precedence which really bodes well for the future of the stock market. In fact, it is only because of the blockchain technology, stock markets today are becoming more borderless in their approach allowing people from different countries to trade on different platforms.
The actual cases of blockchain use in the stock exchanges are growing both in number and influence. In the past couple of years, we have witnessed that many stock exchanges have taken note of the blockchain technology and putting efforts to integrate this distributed ledger into their work culture. This indeed is a positive trend as it points towards the fact that blockchain is not seen as a threat by the traditional stock market and exchanges are ready to incorporate changes for their business sustainability. As traditional exchanges are rich in resources, they are not feeling any kind of a resource-constrain to apply the blockchain in their operations.
Adoption by Financial Sector
In the traditional financial sector, many well-known organizations have started integrating blockchain in their operations. Take the examples of Bank of America, MasterCard, or JP Morgan group, all of which have filed a number of patents related to blockchain technology. We have also witnessed stock exchanges like the Chicago Mercantile Exchange and Chicago Board Options Exchange which are preparing to integrate digital assets on their exchanges. NASDAQ exchange is not far behind and has made it clear that it is going to launch crypto assets very soon in the future.
Experts believe that this institutional interest into the cryptocurrency and blockchain is going to be a game changer for the digital assets. The interest of investors is rising in cryptocurrencies and exchanges which are providing them the option of the digital assets are winning the business in a big manner. The current value of the crypto industry is somewhere around $400 billion and expected to grow exponentially in the coming years. No wonder all the big names in the financial as well as exchange industry is keen on integrating crypto in their portfolio.
The case for blockchain technology is even stronger than the cryptocurrency. While the crypto industry is replete with many turbulent changes which manifest in the form of price fluctuations, blockchain technology is helping the organizations worldwide to drive up the efficiency by cutting on the transaction time and cost. The blockchain is focused on improving the core of the business and helps them to remain relevant even amidst price competition and changing customer preferences.
Despite all the evidence of the growth and adoption, there are still a number of challenges that the crypto industry and blockchain technology has to overcome before they become an integral part of the financial market and stock exchanges. The need for a proper legislative framework which will control the digital assets under clearly defined rules and regulations is the need of the hour. Here also we have witnessed the small countries taking the lead in terms of regulating cryptocurrency though big nations and stock exchanges are slow to react to these regulatory demands. In order to list the crypto assets on the traditional exchange, there is a requirement of a proper legislative framework. The contours of the framework are something which the organizations and nations are not very sure about, and hence, there is an inordinate delay hurting the prospects of crypto adoption around the globe. It is required for the policy makers to understand that in order to kick start a new phase of growth, the regulations regarding crypto and blockchain have to be there. Governments are waking up to this new reality, and hopefully, we will witness more and more nations adopting the regulatory framework for the larger good of cryptocurrency and blockchain technology.