The financial world is one that loves to take advantage of newer technologies to help improve efficiency and overall profits. Blockchain has been around for a while now, and it has been mainly used in the cryptocurrency sector. Yet, as the technology has evolved there are other windows of opportunity opening for its use.
Forex and CFD trading is an area where testing is being done on how to implement blockchain technology to drastically improve overall daily functions. With the possibilities that exist for this technology, it only makes sense to want to see the effects it has on trading. There has been some testing done already, and it has some promising results.
Blockchain Basics
Blockchain technology has been growing in popularity in recent years, but what exactly is it all about? In simple terms, blockchain is a type of storage medium, like a spreadsheet, where all of the cells are linked together like a chain. These chains can be shared across multiple systems, and are an extremely efficient way of recording transactions.
Faster and More Efficient Transactions
Even the best forex broker Australia can muster would jump at the chance to have added speed and efficiency to their daily transactions. By implementing blockchain technology the transactions across forex and CFD trading would end up much quicker and therefore cost less overall. Since the goal is to make as much money as possible, this is pointing towards something very positive.
Better Access for Everyone
Everyone deserves a fair shot at an even playing field when involved in forex trading, but the current setup gives the big boys some advantages. As blockchain is such a great way to share and store information, everything from transactions, to rules and regulations, news, and everything can be easily accessed by everyone.
This way it isn’t just the best regulated forex brokers that will have the most transparency in the currency markets, it will allow others to compete. While this is not a reality yet, there is some traction on it and it could really benefit the average Joes in the future.
Beefed Up Security
When there are literally trillions of dollars on the line at any given moment, having better security is an added bonus. With how quickly trading happens on forex markets, and with smaller sums constantly being liquidated, it is a prime target for thieves and hackers. The encryption methods that blockchain data features are much harder to crack.
The cryptographic encoding of blockchain features hash numbers that are used to differentiate various blocks of information. These hash numbers are what link these blocks together, and they are very difficult to access and fool with. While nothing is perfect, this encoding technology is extremely secure.
It Still Needs Testing
Blockchain technology almost sounds too good to be true, as it seems to offer major bonuses to forex and CFD trading, and that is just one example. The main issues, as with all newer technologies, it still requires more testing for it to be considered the new standard. Some major tests have already been completed and with good results.
As well, some of the larger players in the market just are not ready to adopt a new way of doing business. These finance companies enjoy what they have going on right now, and it makes them hesitant to change anything. Only time will tell if blockchain will make a serious impact on daily currency trading.