How Blockchain is Impacting the Forex Market

The FX space is a huge global marketplace, and one that sees more than $6.6 billion traded every single day. Incredibly, this market also has a total value of $1.934 quadrillion, while more than 170 global currencies are included in pairs and available for individuals to trade. The market has also undergone a significant tech-led revolution through the digital age, with online forex brokers now enabling investors to plan, execute and manage their orders through a single interface. More recently, blockchain technology has also evolved to disrupt the marketplace, delivering significant advantages to traders in the process. But how exactly is blockchain technology achieving this aim? Here are some examples to keep in mind: Increasing Transactions Speeds and Reduced Trading Fees The use of automation and advanced forex robots has already increased transaction speeds markedly online, while there’s no doubt that blockchain’s distributed ledger technology has the potential to reduce these speeds further. It also has the potential to reduce the fees associated with forex transactions, which may be applied by brokers and central banks at the point of exchange. But why is this the case? Well, blockchain is a completely decentralized technology that negates any third party or central point of control, arguably doing away with the need for the brokerage platforms that we use today. This also means that there’s no central authority that can charge to process transactions, with blockchain utilizing different protocols and consensus mechanisms to select network validators and optimize transaction speeds. Even banks and leading financial institutions have adopted blockchain in a bid to reduce foreign transactions fees and incentivise customers, while platforms such as Ripple (which is a real-time exchange system that has virtually eliminated transaction costs) currently allows the payment and exchange of various fiat currencies. In the future, blockchain technology may also help the FX industry to evolve into a peer-to-peer platform, where even large-scale transactions can be handled by a much broader pool of financial market players that enables you to access the most competitive transaction fees and optimize your profits.

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