As you know, block chain technology is all the rage in the financial world. In some cases, this is to the exclusion of Bitcoin itself. No matter how you think about that, several firms have cropped up to find other uses of the Bitcoin block chain, including Patrick Byrne’s Overstock, a longtime supporter of Bitcoin, who just a few months ago opened the doors of TØ.com, a transparent stock lending platform. Stock lending is a massive part of the financial industry, with nearly a trillion dollars in stocks being on loan in the US at any time.
Yesterday, Clique Fund, a New York-based securities-trading hedge fund, engaged in the first trade through the platform, borrowing $10 million in shares of 30 different Dow Jones stocks. While this is just a tiny fraction of all trading activity, even for a single day, it shows that firms are willing to take risks with platforms like TØ.com now that the technology appears to be maturing.
TØ.com can also be used to issue, buy, and sell stocks. Byrne believes that a lack of transparency has led to most of the corruption seen on Wall Street and has previously spoken at length about what he views as unchecked cronyism and/or gangsterism in the financial industry. His TØ.com co-founder, John Tabacco, told Wired this was not the first trade, merely the largest. The platform has facilitated trades for four other companies over the last couple of weeks. “We’re starting to get critical mass—institutional-sized trades,” he said.
Wall Street: Bitcoin Friend or Foe?
Of course, it’s not just true Bitcoin believers like Patrick Byrne and his Overstock.com who are taking advantage of the technology in recent months. Nasdaq announced a few months ago that it would be redesigning the way trades are conducted on their exchange using block chain technology. Other companies such as Symbiont are working on platforms similar to what TØ.com has built.
Bitcoin can be useful as more than just a cryptographically secure form of digital cash with immutable transactions. The block chain can be used for all kinds of purposes, as Factom and other firms have begun to demonstrate with their uses of the decentralized ledger. TØ.com will likely be joined in the coming years by other firms who will see the value of using the Bitcoin network for moving value beyond just payment systems and currency trading.
Some have taken issue with the contention of certain financial figures such as Blythe Masters, who have said that Bitcoin itself is not important when compared to the power the block chain offers. Many Bitcoiners feel that this view is uneducated at best, in that the security of the block chain depends on miners mining for financial reward.
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