Blockchain-Based Settlement for Asset Trading
| Autor: | Thorsten V. Koeppl, Jonathan Chiu |
|---|---|
| Rok vydání: | 2019 |
| Předmět: |
Economics and Econometrics
Blockchain media_common.quotation_subject ComputingMilieux_LEGALASPECTSOFCOMPUTING Microeconomics Order (exchange) Accounting 0502 economics and business Club good Asset (economics) 050207 economics media_common Finance 050208 finance business.industry 05 social sciences Financial market Payment restrict Delivery versus payment Digital currency ComputingMilieux_COMPUTERSANDSOCIETY Economic model Business Settlement (litigation) Database transaction |
| Zdroj: | The Review of Financial Studies. 32:1716-1753 |
| ISSN: | 1465-7368 0893-9454 |
| DOI: | 10.1093/rfs/hhy122 |
| Popis: | Can securities be settled on a blockchain and, if so, what are the gains relative to existing settlement systems? We consider a blockchain that ensures delivery-vs-payment by linking transfers of assets with payments and operates via a Proof-of-Work protocol. The main benefit of a blockchain is faster and more flexible settlement, whereas the challenge is to avoid settlement fails when participants fork the chain to get rid of trading losses. To deter forking, the blockchain needs to restrict settlement speed through block size and block time in order to generate sufficient transaction fees which finance costly mining. We show that large enough trading volume, sufficiently strong preferences for fast settlement and limited trade size and risk are necessary conditions for blockchain-based settlement to be feasible. Despite mining being a deadweight cost, our estimates based on the market for US corporate debt show that gains from moving to faster and more flexible settlement are in the range of 1-4 bps relative to existing legacy settlement systems. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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