London Stock Exchange Group Ventures Into Blockchain-Powered Digital Markets
7 December 2023
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The London Stock Exchange Group (LSEG) is set to revolutionize traditional financial asset trading with a blockchain-powered digital markets business.
This proposed 'end-to-end digital market ecosystem' aims to streamline the capital raising and transfer process across various asset classes in a cost-efficient way.
After almost a year of feasibility studies, LSEG believes they've reached a turning point and is gearing up to advance its plans.
Pending regulatory approval, the group may establish a separate legal entity for the digital markets venture, with hopes to make it operational within the next year.
While LSEG has clarified its focus isn't on digital assets, the initiative aims to leverage blockchain technology to improve security and accessibility in asset trading.
The goal is to create a more efficient, transparent trading process while adhering to regulatory standards.
Asset tokenization, which enhances liquidity and access to traditionally illiquid assets, is becoming increasingly popular in the financial sector.
Last year, the Avalanche Foundation and Securitize introduced initiatives related to asset tokenization, and major institutions like Bank of America have recognized its potential.
BlackRock CEO Larry Fink, once a crypto skeptic, now sees tokenization as the future of securities markets.
These institutions predict that the tokenization of traditional assets will transform financial infrastructure within the next five to 15 years. Read more here.
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What's The Difference Between Centralized Corporate Blockchains And Splitchain?
Big transformations are coming in the world of asset trading.
The London Stock Exchange Group's (LSEG) move to delve into the blockchain-based digital markets is a noteworthy event.
Through the use of the same technology that fuels cryptocurrencies, LSEG aims to transform and simplify the trading process.
But from the early information available, it won't run on common blockchains like Bitcoin or Ethereum's ground network.
Most corporate blockchain systems are centrally managed ledgers, like a database with all of the history and transactional changes being made cryptographically verifiable.
They are taking a huge pie of abilities that come with crypto systems and then only use a narrow slice of them.
This moves blockchain away from an open protocol, to one controlled by a small number of entities, such as LSEG, and is tailored to only one specific use case.
LSEG's attention is not on crypto assets but on utilizing blockchain technology to improve the security and accessibility of asset trading.
They're possibly doing this as current traditional blockchains can't handle the scale needed, so a centralized, cut-down solution is used to make the piece fit.
Instead of going down this path—which limits the potential of crypto technologies, if you manage to solve the issues with traditional blockchains, a whole different landscape emerges.
Zucoin's Splitchain network is working on more decentralization, unlike most centrally managed blockchains offered by the corporate world.
Splitchain focuses on fast, 90-second transaction settlement times, no fees by default, and improved safety with two-factor transactions.
Its ability to break down transaction amounts to 32 decimal places enables extremely tiny transactions without in-built network charges.
A system like Zucoin and its Splitchain network can best grow, long-term, by moving towards an open source system, as Zucoin is doing.
The goal is to widen the all-inclusive effects of the original vision of cryptos like Bitcoin.
To reach all areas of the world.
Otherwise, blockchains like LSEG's are just another kind of database controlled by a corporation.
Consider the growing interest in asset tokenization in the financial sector.
This involves putting all kinds of assets, real and digital, onto the public ledger, to verify truths quickly and easily.
To make such a capability truly span the globe, such a system needs to be decentralized.
Without this approach, there would be too many unique regional regulations to deal with.
It's better to allow participants from all kinds of countries to collaborate, keep the network going and use a network like Splitchain for applications that are specific to their local regions, complying with their own region-specific regulations.
All the while, the Splitchain network remains a silent protocol, operating behind the scenes across the globe.
The tokenization of traditional assets, as foreseen by institutions like Bank of America and BlackRock, is set to reshape our financial infrastructure in the upcoming years.
With its distinctive features, Zucoin could significantly contribute to this transformation, offering a more sustainable, efficient and easier-to-operate ground-up alternative to blockchains, without sacrificing many of the inherent wider benefits of a full-featured crypto system.
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All the best,
—Rob
MyZucoins
Disclaimer: Of course, this is not advice, financial or otherwise. It’s also important to consider the risks and challenges associated with any potential benefits.