2015 has marked a turning point in the finance industry on many levels. One massive force lies behind this turning point: anything that can be digitized is being digitized and delivered through the internet.
This huge force generates countless revolutionary trends. It starts with the rise of Fintech, shared economy, digital banking, digital payments and peer-to-peer lending. And it continues with the impressive growth of secondary market web trading arenas such as Nasdaq Private Market and PrivatEquity.biz.
Since digitization and the web are irresistible, isn’t it natural to expect the creation of “The Internet of Money”? In 2015, the financial industry is already saying “yes”.
And what will be the basis of this “Internet of Money”? Most probably, the blockchain technology.
We all heard about bitcoin, the virtual crypto-currency which is “mined” through computers and delivered through the web, without the control of any formal authority such as central banks.
So how can blockchain be described? Without delving into technical explanations, we can say that blockchain is a distributed ledger technology whose main use today is to serve as the digital mechanism in which bitcoin transactions take place.
But more importantly, blockchain technology can be used not only for bitcoin, but for most, if not all, financial assets. In other words, blockchain offers a new way of creating, exchanging, and tracking the ownership of financial assets on a peer-to-peer, instant, paperless and unforgeable basis.
As such, it can re-build the whole financial system and insurance industry from bottom up. In essence, blockchain can “help run finance ledgers and certify transactions in a much more efficient, fast and transparent way,” according to the Spanish mega-bank Santander. The bank estimated that blockchain can reduce the infrastructure costs of banks by up to $20 billion each year by 2022.
A growing list of prestigious financial institutions are seriously exploring blockchain for various aims such as instant and hassle free payments. The following partial list shows the dramatic impact blockchain is already making: Barclays, UBS, Bank of England, Deutsche Bank, Credit Suisse, Santander, Goldman Sachs, JP Morgan and many others.
Now, since blockchain can be used for the automation and digitization of any financial asset, why not use it for shares? The managements of stock exchanges such as the London Stock Exchange and Nasdaq have understood this, and are already moving in this direction.
And where will the use of blockchain for shares be the fastest? In the secondary market web trading arenas.
We at PrivatEquity.biz know this for sure.
We know this because PrivatEquity.biz has already been developing its blockchain powered platform, which is set to be formally launched in the first half of 2017. The PrivatEquity.biz blockchain platform is going to be one of the first implementations of blockchain for private shares. We will equip the private high-tech companies and shareholders in our arena with a full-fledged blockchain user interface, which will enable them to handle their private shares and cap-table based evaluation in a digital, instant, real time and unforgeable way.
For example, if an employee would like to present 1,000 shares for sale, she can upload the shares to her “electronic wallet” on the arena. In case an investor would like to purchase the shares, the investor will deliver money from her own electronic wallet to the electronic wallet of the employee. Among other benefits, this process will eliminate paperwork, manual signatures and the use of lawyers.
Additionally, companies who present their shares will be able to update their capitalization tables accurately and in real time, saving the delays that they used to experience in the past.
To sum up, blockchain will revolutionize the finance industry, and one of the pioneers of using blockchain in finance is set to be secondary market web arenas – including PrivatEquity.biz.