Recently, Wall Street companies have become increasingly interested in Bitcoin’s technology. One of these companies is Nasdaq OMX Group Inc.; this week Nasdaw announced a partnership with Cain — a new San Francisco-based startup — for a “Pilot Test Program” to test trading private company shares with the blockchain.
Bob Greifeld, CEO of Nasdaq, stated:
”We are excited about the potential impact of this new endeavor with Chain on the transaction process. As Blockchain technology continues to redefine not only how the exchange sector operates, but the global financial economy as a whole, Nasdaq aims to be at the center of this watershed development. This Nasdaq Private Market project aims to simplify the overwhelming challenges private companies face with manual ledger record-keeping. As blockchain technology continues to redefine not only how the exchange sector operates, but the global financial economy as a whole, Nasdaq aims to be at the center of this watershed development.”
Chain aims to create frictionless and secure financial products and infrastructure to financial institutions embracing the blockchain technology. Chain’s platform enables the development and operation of reliable, secure, and private blockchain-based products and services. Chain’s infrastructure services can power any asset type, including securities on any blockchain. Chain’s customers span the payments, banking, capital markets, telecom, and energy markets. The company also serves thousands of individual developers and startups building innovative products with blockchain technology.
Managing the shares of private companies has long been an expensive and complicated process. To make matters worse, the whole extent of the process often makes the information become outdated. The purpose of the Nasdaq-Chain pilot program will be to identify and introduce new solutions in the financial industry.
The first company whose shares will traded in the blockchain pilot program — set to launch later this year — will be Chain itself. Nasdaq will be testing the blockchain in Nasdaq Private Market, a marketplace for pre-IPO trading of shares in private companies; since its launch in January 2014, Nasdaq Private Market has landed more than 75 clients.
Several companies have been offering software that manages a company’s capitalization table, thereby replacing spreadsheets as well as convertible paper notes, paper options grants, and paper stock certificates. The blockchain technology goes far beyond this by allowing for every transaction to take place securely and be recorded on a public ledger, spread and secured around the world — with every participant agreeing with each other about each transaction.
Adam Ludwin, Chain’s CEO, says:
“While the Blockchain has an obvious advantage over paper for cap table management, it is also superior to software.”
Chain has also announced another partnership with Gyft, owned by global payments technology firm First Data, to run power gift cards for small businesses. The startup, which not only works with traditional financial institutions, but also has more than 3,000 developers using its tools, has received $15 million in funding from Khosla Ventures, RRE Ventures and SV Angel.
Now, with the Elliptic software helping companies to comply with regulations, The Nasdaq-Chain becomes part of another trend; Wall Street is starting to explore the immense possibilities offered by Bitcoin and the Blockchain.
In the first six months of 2015, several Wall Street institutions announced investments in or partnerships with Bitcoin startups. Following this sudden interest, some long-time Wall Street players and financial regulators left their positions to head up or join Bitcoin companies. A lot of companies are rushing into digital currencies. The popularity and belief in Bitcoin and its underlying technology have turned the consensus around digital currencies upside down. Now, there seems to be a belief that this technology can be something useful.
The pilot program marks the beginning of a new trend for digital currencies, and if all goes well, the system could be adopted by other private companies in Nasdaq Private Market and even the public exchange.
What do you think Nasdaq Pilot Program can lead to?Let us know in comments below!