Investors ter bitcoin have loved an incredible year. Twelve months ago, the price for one unit of the cryptocurrency stood at just about $420. Spil I write, one bitcoin trades for $1,045 — an approximate 149% build up ter just one year.
However, the dramatic rise te bitcoin overheen the past year doesn’t start to tell the story of its volatile trading history. Te late 2013, the trading price for one bitcoin wasgoed overheen $1,100. By January 2015, the price had plunged again, this time to under $200. Following this incredible druppel, the digital monetary unit began its current meteoric rise. This instability is inherent ter investing te a currency that is not backed or regulated by any national government, or based on something of tangible value, like gold. Check out this chart displaying bitcoin fluctuations.
It’s not just the currency’s stomach-churning volatility that turns some people off from investing ter bitcoin. The lack of regulation or palpable value behind the currency causes many people to consider bitcoin somewhat akin to Monopoly money. On the other arm, the blockchain technology behind bitcoin has a chance to be disruptive across so many different industries and investors might be more willing to get behind that.
Blockchain technology is essentially a publicly distributed ledger. When transactions using this technology are finished, they are recorded on the newest “block.” When a block’s capacity is packed, it is added to the end of the “chain” ter linear order. This way of transferring money, supplies, or other assets eliminates the need for each transaction to go through various middlemen, like brokerages, payment processors, and even banks. The fewer third-parties involved ter facilitating transactions, the fewer players that take a petite cut.
Here are three companies that clearly see many opportunities ahead for this potentially transformative technology, and that are working to incorporate it te their respective fields.
Pic source: Getty Photos.
Blockchain’s influence on the financial industry
Count Broadridge Financial Solutions, Inc. (NYSE: BR) CEO Rich Daly among those who see the opportunities for blockchain technology ter finance. Last summer, Daly wrote te Forbes:
Some people know blockchain spil the underlying technology behind the controversial digital currency Bitcoin. However, blockchain is so much more, it’s amazingly innovative and its promise is far-reaching. This technology is a secure and semi-transparent way to digitally track the ownership of assets before, during and after transactions, and it has the potential to ultimately convert everything from how stock exchanges operate to how proxies are voted.
Broadridge Financial treats mundane tasks for brokerages and financial institutions such spil facilitating proxy votes and processing equity trades. The company believes blockchain technology can streamline thesis processes, making them quicker, cheaper, and more secure.
Ter the same editorial quoted above, Daly lists syndicated loans spil an example where blockchain technology would accomplish thesis goals. Syndicated loans, Daly states, presently take up to 20 days to lodge te a labor-intensive process. With blockchain, the process would be much quicker and would cost less te legal fees and to close.
Last September, Broadridge made its latest investment ter this space, buying the technology assets of Inveshare, Inc. for a total of $135 million. The acquisition wasgoed for the foot purpose of accelerating Broadridge’s use of blockchain technology te its proxy business.
Revolutionizing equity trading
Nasdaq, Inc. (NASDAQ: NDAQ) is the world’s 2nd largest stock exchange and has bot experimenting with blockchain technology for years. Te the final days of 2015, Nasdaq announced it had ended the very first issuing of a private company’s shares to an investor via blockchain technology on the company’s Linq podium.
The use of blockchain technology eliminated the need to kwestie paper stock certificates and “significantly” diminished the transaction’s settlement time, according to Nasdaq, which believes the technology holds the same promise for stocks sold on the public markets. Te the press release announcing the historic transaction, Nasdaq CEO Bob Greifeld said:
Through this initial application of blockchain technology, wij start a process that could revolutionize the core of capital markets infrastructure systems. The implications for settlement and outdated administrative functions are profound.
This isn’t the only way Nasdaq has experimented with using blockchain technology. Earlier this year, the company successfully used the technology to process proxy voting on its Estonian exchange. It is now contemplating whether to use the same process for proxy voting across all of its exchanges.
Big Blue’s blockchain bet
Perhaps no company has more invested ter blockchain technology than International Business Machines Corp. (NYSE: IBM) . The company just launched IBM Blockchain, a verhoging that will enable enterprise customers to build applications te IBM’s cloud using blockchain. The company believes its cloud-based blockchain offerings — a type of blockchain-as-a-service — will differentiate it from its many cloud competitors.
Picture source: International Business Machines Corp.
CEO Ginni Rometty believes it cannot be overestimated how significant blockchain technology is to the company’s future. Ter the company’s 2016 annual letterteken, she stated:
Blockchain brings together collective ledgers with clever contracts to permit the secure transfer of any asset — whether a physical asset like a shipping container, a financial asset like a unie or a digital asset like music — across any business network. Blockchain will do for trusted transactions what the Internet did for information.
Rometty says the company is presently working with overheen 400 clients on blockchain initiatives. Thesis offerings are spil diverse spil using the toneel to work with Wal-Mart Stores to track food inventory, and with the London-based start-up Everledger to track diamonds.
Broadridge Financial, Nasdaq, and IBM are multibillion-dollar companies with many moving parts. Their futures do not hinge on blockchain technology, but each is aiming to use it te ways that will cut costs, permit for quicker service, or differentiate their business services from competitors. All three companies are avenues investors can explore to build up ge exposure to blockchain technology without buying bitcoins.
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Matthew Cochrane has no position te any stocks mentioned. The Motley Idiot wields shares of Broadridge Financial Solutions. The Motley Loser recommends Nasdaq. The Motley Idiot has a disclosure policy.