Nasdaq Selects Bitcoin Startup Chain to Run Pilot in Private Market Arm
Nasdaq has partnered with San Francisco-based bitcoin API startup Chain to implement the Bitcoin blockchain technology in its newly launched marketplace, Nasdaq Private Market.
Previously reported by Bitcoin Magazine, Nasdaq announced its plans to implement Bitcoin’s blokchain technology into its pilot test, where shares of private companies are handled and traded as smart assets on the blockchain.
Unlike other decentralized asset trading platforms, Nasdaq plans to utilize the colored coin protocol Open Assets based on the Bitcoin blockchain instead of developing an alternative blockchain or digital currency.
“I am a big believer in the ability of blockchain technology to effect fundamental change in the infrastructure of the financial services industry,” said Bob Greifeld, CEO of Nasdaq. “Clearinghouses are a wonderful invention, but if you have a public ledger that is trusted, you can evolve back to a bilateral (trading) world but proceed with instantaneous settlement. We currently settle at T+3 [within 3 days]. Why not settle in 5-10 minutes?”
Chain Bitcoin API
Bitcoin API startup Chain is set to provide Nasdaq with the infrastructure and simplified API for the Bitcoin blockchain. Its easy interface to transactions on the Bitcoin blockchain will simplify the process of trading shares and assets in Nasdaq’s pilot test.
“It currently costs a lot of money to make sure there are no mistakes, even when you’re using [software], because there are human factors involved in the transfer, recording and valuation work around securities,” explained Adam Ludwin, CEO of Chain.
Stock exchanges have spent millions of dollars in handling transactions and shares of private companies over the last decades. The process of trading shares on the stock exchanges has always required labor-intensive operations, from managing spreadsheets to the completion of documents and the approval of lawyers. With the help of Chain and Nasdaq, Bitcoin may prove to be the solution to the long-time problems of stock exchanges.
Chain has rasied $15 million USD in funding from Khosla Ventures, RRE Ventures and SV Angel. Within its first year of launch, the Chain API has been used by more than 3,000 developers creating Bitcoin apps and platforms.
With the growing popularity of Chain’s API, the Bitcoin startup’s shares are set to be the first to be traded on the blockchain upon the launch of the project later this year. The issued shares of Chain is set to be coded into a very small amount of bitcoin with metadata that states necessary information for shares trading: number of shares being transferred, receiver, and seller.