North American interest in Bitcoin technology recently reached the major trading venues and top multinational exchanges, a veritable ‘Concorde moment’ for the virtual currency being NASDAQ OMX Group, Inc. (NASDAQ:NDAQ) core technology being the focus of New York start-up Noble Markets in March this year, in order to operate its new marketplace which facilitates Bitcoin and other digital currency assets to be traded by commercial and institutional investors.
NASDAQ OMX has since built on this, and in a further display of its willingness to bring Bitcoin into use within major electronic exchanges, has begun testing a new use of the technology that underpins the digital currency bitcoin, in a bid to transform the trading of shares in private companies.
This particular experiment, initially reported yesterday by the Wall Street Journal, is intended as a proving ground by NASDAQ for the potential introduction of blockchain technology into its stock market.
Should the initial test pave the way toward full implementation, this could be one of the largest disruptive innovations in the trading of financial assets for several years.
“Utilizing the blockchain is a natural digital evolution for managing physical securities,” said NASDAQ Chief Executive Robert Greifeld. He said the technology holds the potential to “benefit not only our clients, but the broader global capital markets.”
NASDAQ will start its pilot project in NASDAQ Private Market, a fledgling marketplace launched in January 2014 to handle pre-IPO trading among private companies. The platform has more than 75 private companies signed up, according to the company.
Private companies typically handle sales and transfers of shares with largely informal systems, including spreadsheets maintained by lawyers who verify transactions by hand. Nasdaq wants to replace that process with a system based on bitcoin’s blockchain technology.