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

Author

Listed:
  • Modsching, Marko
  • Apfelbacher, Axel
  • Horch, Johann
  • Kummer, Nathan

Abstract

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.

Suggested Citation

  • Modsching, Marko & Apfelbacher, Axel & Horch, Johann & Kummer, Nathan, 2017. "Using a blockchain-based approach to exchange (financial) assets," Journal of Digital Banking, Henry Stewart Publications, vol. 2(2), pages 110-122, September.
    • Handle: RePEc:aza:jdb000:y:2017:v:2:i:2:p:110-122
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    More about this item

    Keywords

    trading on blockchain; asset-swap; digital asset; decentral trading; peer-topeer; trading; atomic asset swaps;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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