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Using a blockchain-based approach to exchange (financial) assets

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This paper discusses concepts and approaches to settling and clearing processes in securities trading, and how they can be optimised by shared ledger technology. The principal idea is that a trade is ultimately a simple swap of ownership IDs of two individual assets. By successfully updating the link between the ID and asset on a distributed ledger, the ownership transmission is irreversible and visible to other traders, signalling that the asset is now assigned to someone else. The paper introduces digital assets in conjunction with digital asset issuers as special players in order to run such an infrastructure. In addition, an adapted model of transaction as the swapping unit is introduced to enable a trade without one party taking a leap of faith. With that set-up in mind, the paper discusses different blockchain architectures and technologies that the system could potentially run on.
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Keywords: asset-swap; atomic asset swaps; decentral trading; digital asset; peer-topeer; trading; trading on blockchain

Document Type: Research Article

Publication date: September 1, 2017

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  • Journal of Digital Banking is the major new professional journal publishing in-depth, peer-reviewed articles and case studies on how to develop a profitable, customer-focused digital banking strategy – specifically by using technology and automation to deliver efficient, secure and seamless customer experiences with lower operating costs.

    Each quarterly 100-page issue – published in print and online – will feature detailed, practical articles showcasing the latest strategic thinking on how to exploit new and existing digital banking markets, technologies and business models along with actionable advice and ‘lessons learned’ from fellow digital banking professionals on the key business, risk and operational requirements for putting that strategy into practice. It will not publish advertising but rather in-depth analysis of new thinking and practice at a wide range of financial institutions, financial technology innovators, central banks and financial regulators worldwide for readers to benchmark their organisation against, with every article being peer-reviewed by an expert Editorial Board to ensure that it focuses on the digital banking professional’s perspective, the challenges they face and how they can tackle them.

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