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Experts Think Blockchain Can Solve NYSE Trading Problems
During a software update last Monday, a glitch caused the New York Stock Exchange (NYSE) to incorrectly stop trading on about 40 stocks. Odd trading showed a 99% decline in companies including Warren Buffett’s Berkshire Hathaway Inc..
However, this issue was resolved in about 45 minutes. The Consolidated Tape Association, which operates under a subsidiary of the NYSE, switched to a backup data center with a different software version to address the problem.
How can decentralization prevent trade disruption?
The forced breaks began just before 9:45 a.m. in New York as CTA implemented a software update. This software controls the opening prices displayed on the Securities Information Processor. This feed consolidates offers and requests quotes from various exchanges.
Around 9:50 am, traders traded about a dozen Berkshire Class A Stock (BRK.A). for $185.10. The stock had closed Friday at $627,400. Following the incident, the NYSE announced that any trades between 9:50 a.m. and 9:51 a.m. at or below $603,718.30 will be canceled.
To know more: What is a Blockchain Oracle? An introductory guide
BRK.A Price trend. Source: Google Finance
The outage did not affect Nasdaq-listed stocks and had little impact on the broader market. This occurred as the trading infrastructure moved towards one-day, rather than two-day, arrangements, known as T+1.
A technical glitch left the S&P 500 index without real-time prices for more than an hour on Thursday. Two days earlier, another exchange had interface issues with its data stream.
While the matter is now resolved, Sergey Nazarov, co-founder of Chain shirt (LINK), underlined it traditional financial systems they are susceptible to significant weaknesses due to their centralized structure. He outlined how Chainlink works oracle the internet could offer a solution.
“Decentralized oracle networks, invented by Chainlink, can mitigate these risks by providing accurate, tamper-proof data. These networks aggregate data from various sources and use consensus mechanisms to validate the information, ensuring data integrity and preventing erroneous trades and price manipulations,” Nazarov She said.
Oracle networks like Chainlink provide smart contracts with the real-world data needed to function as financial instruments and business contracts. They decentralize the data validation process. This method prevents a single point of failure that is common in centralized systems.
Adoption of blockchain technology It would allow real-time checks and automated responses to anomalies. This change could significantly improve the reliability and transparency of modern financial markets.
Aside, Edward Snowden, IT systems expert and former National contractor Safety Agency, ironically he answered to this incident by writing, “Bitcoin solves this problem.” Cryptocurrency enthusiasts often use this iconic line to support the technology. While this statement is humorous, Bitcoin, as a blockchain-based asset, is historically less inclined to sudden trading halts as the NYSE experienced.
According to data, Bitcoin has maintained an uptime of 99.99% throughout its history. The network has only experienced two downtime events, the last occurring more than ten years ago.
To know more: The 7 Hottest Blockchain Stocks to Watch in 2024
Since then, Bitcoin has maintained continuous uptime. However, most Bitcoin trading occurs on centralized exchanges, which are susceptible to interruptions.
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