How Blockchain Technology And Cryptocurrency Can Influence Trading
It could be stated that trading is in excellent health as we head in 2020. While figures are only sporadically declared, in April 2019, the Bank of International Settlements announced that the daily turnover in the OTC FX markets had reached around $6.6 billion a day. When the prior BIS report was published three years earlier, this figure was $5.1 billion, which gives a great indication of the market’s trajectory.
While the US dollar is the most accepted currency, the Australian and New Zealand dollars are also popular amongst traders. There are two principal factors behind this. The first is their comparative stability, and the second is the respective governments’ hesitation to interrupt to control their value.
In the generally growing world of currency trading, one perspective that has amazed many is the very vital part of being performed by blockchain technology. The system by which all payments and buying utilizing cryptocurrencies are made has also established itself to be exceedingly beneficial in the forex trading platform for many of the same reasons that it is applied for cryptocurrencies.
The first reason why blockchains are the backbone of cryptocurrency processes is that it is a reliable system. Because of the nature behind it, it is easy to see straight away that transactions are valid. Transactions and trades can also be made, performed at a higher speed, which is an indisputable benefit to all those involved.
However, another advantage is that it allows minimum transaction costs. The complete anonymity of the blockchain is another significant advantage for traders, especially in a world where cyberattacks are an ever-growing threat.
One of the key goals behind the original invention of cryptocurrencies was that they would be decentralized and free from the association of banks and other institutions. Nowadays, trading can occur utilizing blockchain, and peer to peer trades has also now become a fact. Not only has this had an enormous liberating effect on the market, but by cutting out agents, it has also served to increase speed while reducing costs.
Generally, once big financial institutions began to see the benefits of adopting blockchain, they also desired to get in on the act. Consequently, today, some of the world’s largest banks have done just that. The global bank HSBC has been one of the first to go public with data about how much it now relies on blockchain.
In February, the bank reported that it was accomplishing what is explained as a “small proportion” of its daily trades on its FX Everywhere system. It also affirmed that in the 12 months preceding up to the declaration. They had processed $250 billion worth of trades cutting trading costs by around 25%.
Other financial institutions and banks have undoubtedly read this information with interest. They are likely to be making plans of their own to use blockchain technology for their forex trading platforms.
This is excellent news for the businesses supporting blockchain technology and is highlighted on the fact that the market for their services is ready to enlarge by over 40% every year until 2022. Since by then, we could well see blockchain behind the majority of forex trades – and, for many, that time can’t come soon enough.