by JP Buntinx
Blockchain-related patents can bring a lot of legitimacy to the distributed ledger ecosystem. Nasdaq, a company openly favoring blockchain technology for quite some time now, recently filed a new patent that refers to a new project to record transactions. This seems to resemble a new distributed system to record exchange transactions.
A New Nasdaq Blockchain Patent
The recent patent filing by Nasdaq wants to add another real-life use case for distributed ledger technology. Although there are multiple research projects underway to bring this technology into the financial sector, many different use cases remain unexplored. For Nasdaq, one of those use cases revolves around recording exchange transaction records in a distributed manner.
The US Patent and Trademark Office released the patent filing submitted by Nasdaq at the end of March 2016. What makes this filing so intriguing is how it touches upon different tools, all of which are related to using distributed ledgers. On the one hand, there are digital wallets, which will be an integral part of the exchange system the company is planning to run.
But there is more, as the application also mentions an order book and matching engine. That is not surprising, as any trade of exchange platform requires these important cogs to make the whole machine work. All of these separate tools will make use of a private and permissioned blockchain. Every transaction or exchange of information taking place across the network will be visible to participants in real-time.
When a match is created on the blockchain-based network, all counterparties receive the hashes of the other party. Additionally, the system will provide information on the match itself. Once this process takes place, blockchain based transactions will be added to the distributed ledger automatically. The new exchange platform will continually check the content of the blockchain, and look for data related to individual digital wallets. A backup of all of this information will be stored in a separate database. Even though this system uses distributed ledgers, having as many backups as possible remains a good idea.
From a security point of view, moving away from centralized database solutions makes a lot of sense. With the number of data breaches on the rise, no financial institution is safe without innovating and embracing new technologies. A shared, distributed ledger of relevant information removes any central point of failure from the equation altogether.
Continuing To Innovate In The Financial Sector
It is anything but surprising to see Nasdaq continue on their quest to merge traditional financial operations with blockchain technology. The exchange operator has been actively pursuing distributed ledgers for quite some time now. In 2015, they launched the Linq platform, which acts as a blockchain project that focuses solely on private markets.
Nasdaq also unveiled the blockchain services for a global clientele in May 2016. This goes to show the exchange operator knows all too well innovation is coming. Embracing disruptive technologies at an early stage may yield them a competitive advantage over other players in the market. For now, it is too early to tell if their latest patent filing will be a big success, though.