GameStop and Bitcoin Renewed a Push to Digitize the Stock Market

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Think about a world the place you possibly can purchase shares, bonds, derivatives, cryptocurrencies and even items of artwork, all on one alternate, 24 hours a day, seven days every week, from wherever on the planet.

On this alternate, trades happen straight between two buyers as an alternative of by a posh latticework of brokers, clearinghouses and different middlemen and gatekeepers. They settle, or shut, virtually immediately, as an alternative of taking as much as two days. The system is cheaper, extra clear and ostensibly extra open. It’s also probably extra risky and dangerous for buyers; earnings can flip into losses within the wink of a watch at any time of the day or evening.

Entrepreneurs have for years dreamed of using blockchain technology, the ideas and software program underpinning bitcoin, to allow digital buying and selling of just about any asset. At the moment the concept appears much less far-fetched than ever.

When buying and selling of videogame retailer GameStop Corp. exploded earlier this year, it illustrated simply how fragile right this moment’s markets could be. It additionally confirmed {that a} new era of inventory merchants operates very similar to crypto merchants: Flash mobs of retail traders gathering on social media and focusing on an asset for a mass-buy has been an indicator of cryptocurrency buying and selling for years.

The present capital markets aren’t constructed for that form of buying and selling, however various pilot applications and different experiments are investigating how one can create digitized markets that may sustain with altering occasions. “We’re seeing a tectonic shift begin to occur,” says Jeffrey Schumacher, the founding father of New Asset Trade, a Manhattan Seaside, Calif.-based startup that goals to assist firms create and promote digital securities.


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