Revolutionizing the Stock Market With Blockchain

Revolutionizing the Stock Market With Blockchain

Namrata Dhanda (Amity University, Noida, India) and Anushka Garg (Amity University, Noida, India)
DOI: 10.4018/978-1-7998-7589-5.ch006
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Abstract

This chapter explores the drawbacks of conventional centralized share exchange frameworks, like those of higher transaction costs, central and vulnerable regulation to exploitation, and lack of revelation to business behavior and practices by introducing a revolutionary model that utilizes blockchain to establish a decentralized stock exchange and a transparent persistent economy. The suggested model utilizes exclusive contracts to implement the validity of the privileges of the owner and the proper accomplishment and settlement of the transactions, thereby mitigating the need for a centralized authority to ensure the accuracy of the stock exchange mechanism. The experimental findings convincingly demonstrate that the decentralized solution can provide lower transaction costs by progressively replacing brokerage costs and centralized officials' commissions with mining charges, which reward the miners for their backbreaking work in maintaining the system and enforcing the laws.
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Introduction

A stock exchange is a platform in which stock brokers and dealers may purchase and exchange assets such as stock and bond shares as well as other investment funds. These security measures and financial activities including the payment of profits and dividends can be given and repaid by shares markets as well. To start a company, we need some amount of capital or income (Donald, 2012). For this purpose, the business is split into small parts that are called inventories and are sold legally, which is referred to as shares. The individual who owns the stock is deemed an investor or a shareholder. Thus they would be considered as a tiny part of the company. The exchange and management of stock therefore is conducted out in the Share / Stock Market. The auctioning process was manual before the advent of Internet but now it’s all digital (Bala, 2013).

There are two prominent markets where all of the stock exchanges take place –

  • NSE – National Stock Exchange

  • BSE – Bombay Stock Exchange

NSE is the youngest stock market of India but currently the biggest market as it uses the electronic systems for investments while the BSE is the oldest stock market of India. Fluctuation indexes in NSE are referred to as NIFTY, while the BSE index is referred to as SENSEX.

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Vulnerabilities In The Current Scenario

The functioning of stock market follows more of a traditional pattern which include the following risk while investing:

  • 1.

    Financial Broker acting as the middle man.

  • 2.

    Stock Market handling.

  • 3.

    Financial Security.

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