ZH
  • EN
  • AR
  • ZH
  • FR
  • DE
  • EL
  • PT
  • ES
  • ID
  • TH
  • VI
  • RU
Type to SearchNo item Found

    Blog

    • Home
    • Blog
    • Market analysis
    • The next big leap for online trading

    Market analysis

    The next big leap for online trading

    24.08.2021by Michalis Efthymiou

    Say hello to Blockchain!

    In the past years, the crypto hype has overshadowed what seems to be one of the most disruptive innovations of the decade that just ingloriously elapsed.

    And by “disruptive”, we mean an innovation that disrupts business-as-usual, create a product and a new market altogether, which frankly has not happened every odd year since electricity, cars or the internet.

    The innovation for online trading

    If blockchain was to be summarized in a few words: it’s a new kind of database.

    But obviously, there is more to it.

    A traditional database structures data like an excel sheet, access to any number of people. It is usually owned and managed by a business or appointed individual with total control over it and the data it holds.

    The key difference between a typical database and a blockchain is the way the data is collected. Blockchain collects information blocks that have a determining storage capacity. When a block is full, it gets chained to the previously filled one, forming a chain of data.

    The storage of all information is done in a distributed (shared) ledger using cryptography. Once the information is stored in a blockchain, it becomes an immutable database and is governed by the rules of the network. Peers participating in the network of exchanges share a single ledger where transactions are validated and the record is permanent and immutable.

    The disruption

    As an over-the-counter market that includes traders, banks, brokers and market makers, CFDs involve many moving parts that face the challenges of regulation, time and fees.

     The foreign exchange market is the biggest in size and non-centralized. It is multi-regulated and makes it challenging for actors involved in terms of compliance and strategy.

    First, blockchain could be the underlying technology of a network that serves as a single regulator and centralized body, bringing perhaps a single global trading license to participants.

    Second, transaction costs could decrease, and regulators could gain direct access to trading information instead of requesting it, making regulatory reporting quasi obsolete.

    In addition to greater transparency, this would allow regulators to intervene faster in case of market or counterparty failures.

    Thirdly, blockchain has the potential to increase security in trading. Forex, for instance, is a very liquid market with large amounts of money moving around and vulnerable to cybercrime, manipulation or human error. The way data is distributed peer-to-peer and encoded in a chain encryption in a network that is distributed across multiple computers known as nodes means there is no single point of failure, and therefore it is practically impossible to manipulate or hack a blockchain.

    A marathon with hurdles

    Let’s entertain the idea of a not so distant future, where blockchain is widespread in Forex and CFDs. By 2035, the big stock exchanges are on a decline proportional to the advent of blockchain networks.

    What’s more, any record of ownership appears on the blockchain, making the goods attached to it instantly tradeable. Traders can customise their position size to their exact specifications, allowing them to manage their risk more with smaller deal sizes, a very popular strategy among scalpers and day traders.

    Front-runners

    In collaboration with the University of Copenhagen, social trading broker EToro has been at the forefront of research on bridging online trading and blockchain, studying the use of blockchain in the lifecycle of a leveraged trade. It published its first findings this year in a paper that draws observations for businesses.

    According to the research paper, the main opportunity for integrating blockchain in leveraged trading is the creation of a level playing field for applications, users, and service providers, which can, in turn, generate healthy competition.

    One of the challenges identified in the study is the risk of redundancy and lack of competitiveness if businesses assimilate processes executed with blockchain technology into a legacy environment. Their advice is to “build from the blockchain and up”, and not build into the blockchain.

    Albeit promising, blockchain is not quite essential yet in the financial sector, not to mention the various barriers to adoption. Among those are that people associate it with cryptocurrencies and the bad reputation it might imply, the fact that it is an immature technology or the rigidity of regulators in their eternal catch-up behind technological advances.

    Arguably, blockchain has the potential to alleviate the biggest pain points in the online trading industry and the causes behind much reputational damage; transparency and compliance.


    Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances, or needs.

    Share

    Related

    Get the Axiance App

    Axiance 是以前作为 EverFX 运营的 Axiance 集团公司(“Axiance”)使用的商标名称,它由 Axiance 集团的一个实体拥有。

    团体许可证:

    ICC Intercertus Capital Ltd 由塞浦路斯证券交易委员会 (CySEC) 授权和监管,许可证编号为 301/16。 EEA 跨境注册:CNMV(西班牙)注册。 4256 | AFM 荷兰 | FI 瑞典 | KNF波兰

    Aerarium Limited 由塞舌尔金融服务管理局 (FSA) 授权和监管,许可证号为 SD036。

    Aurum Capital Limited 获得毛里求斯金融服务委员会 (FSC) 的许可,许可号为 GB20025770。

    Axiance 不向某些司法管辖区的居民提供服务,例如美国、英国、比利时、伊朗、加拿大和朝鲜等。

    本网站上出现的任何商标均为其各自所有者的财产。

    风险警告:差价合约是复杂的工具,由于杠杆作用而迅速亏损的风险很高。交易差价合约时,很大比例的散户投资者账户亏损。您应该考虑是否了解差价合约的运作方式,以及您是否有能力承担损失资金的高风险。请考虑我们的风险披露。

      风险警告:差价合约是复杂的工具,由于杠杆作用而迅速亏损的风险很高。

      风险警告:差价合约是复杂的工具,由于杠杆作用而迅速亏损的风险很高。 70.70% 的散户投资者账户在与该提供商交易差价合约时亏损。您应该考虑是否了解差价合约的运作方式,以及您是否有能力承担损失资金的高风险。请考虑我们的风险披露。