With early man, trading started out simple: exchanging one good for another. Over time, trade has grown and established itself as a powerful economic force on a global scale, governed by borders, regulations, the free market, and legal frameworks that allow us to trust complete strangers in our business dealings.
As complex as the financial system has become, it hasn’t reached a plateau of perfection or anything close to it. Emerging technologies and a changing world have seen to it that trade must also evolve and adapt. Developments in the world of trading today are broadly similar to the changes nearly every industry is going through in order to keep up and continue supporting growth, trade has to be faster than ever, but also more transparent and secure.
Trade — the way we remember it
What we can now think of as the “traditional” system of finance and trade has helped mankind accomplish some astounding feats, moving millions out of poverty and creating capital that has driven growth and innovation across the board in every sector. We are truly the inheritors of a great system — well, a system that has been great, until now.
We’re all familiar with this system that’s brought us so far. Regulators, third-party intermediaries, international law and trade agreements created a mode of economic cooperation and most importantly, trust, around the world.
At a time when global communications were less-than-instant, all went well. The system proved flexible enough to evolve alongside technological developments and continue supporting an ever-more connected world. Countless millions, even billions, gained access to credit — a defining characteristic of traditional trade and finance — and the need for speed in transactions never outpaced the necessity of reliability. It was perfectly ok, desirable even, for banks to take several days to approve transactions.
How the world is changing
Trade is at a dramatic stage of development and adaptation mostly because the entire world is changing. Above all, the speed and quality of global communication have multiplied several times over in recent years. Thanks to the technological developments driving this upward trend, the “traditional” model of trade seem now to be more of a barrier to growth, rather than capable of responsibly supporting it.
Though not inevitable, the development of blockchain technology and the excitement surrounding it have been the natural reaction to these changes. Cryptocurrencies, tokens, and coins built on blockchain technology allow for the instantaneous cross-border trading of wealth and assets, without a middleman to approve transactions. Regulation still has a role to play, but can take on a broader role of ensuring good practices and intentions on the blockchain, which is designed to essentially govern itself safely and consistently.
Recognizing the need for trade to take a serious step forward, a growing number of traditional exchanges are exploring and testing the use of blockchain for settling trades. The main stock exchange in Switzerland, SIX Swiss Exchange, for example, recently announced it is looking into integrating blockchain into its new parallel digital trading platform SDX, telling Cointelegraph:
“The fact is, it takes two days for the buyer of a stock to become the owner. The trade itself only takes a fraction of a second, but after that payments have to be settled and titles transferred. If we put it all on our digital exchange, then the whole process takes only a few seconds. This makes the market more efficient, but at the same time also takes risks out of the system.”
And yet, despite the excitement and potential of blockchain in trade, the technology still has room to improve on one critical aspect that the traditional financial system has been so good at providing on a large scale: trust. And that’s where eToroX comes in, helping to build trust and encourage mass adoption of a system and way of thinking that will bring trade into the 21st Century.
Part of the equation is smart, forward-thinking regulation so that users know they are in some way protected by a legal framework. eToroX is regulated in this way and also supports efforts to reduce the volatility of crypto with the use of stable coins, all while remaining committed to transparency.
Trade has never had a more promising future. Globalization may worry some — but not those who understand blockchain. Through the blockchain trade can now be conducted cheaper and quicker, opening up an endless world of new opportunities, but there must still be a few adults on the playground to carry the banner of responsibility, reliability, and trust.