Brave New Coin (BNC), a Data and Research company headquartered in Queenstown, New Zealand announced today that it is collaborating with Melbourne-based Smartbit to develop the first provable indexes for financial markets, starting with the BNC Bitcoin Liquid Index (BNC-BLX).
The ability to offer 'provable market data' has previously been impossible or extremely difficult. This partnership will be the first to engage in a process called 'Market-Chaining' where financial data such as market indexes, quotes and trades will be secured onto the Blockchain, providing immutable receipts.
"Imagine putting the S&P 500 on the blockchain. Any service, person or machine using this Index to settle against, all of a sudden has a trustless 3rd party to verify that official published rates were in fact used," said Fran Strajnar, CEO of BNC.
The first data feed to be offered in this format will be BNC's Bitcoin Liquid Index (the BNC-BLX), a comprehensive historic & live bitcoin index purpose built for settlement of bitcoin derivatives. As financial services operators use blockchain technology for exciting new solutions like 'proof of reserves', there is also a growing demand for 'proof of settlement', which is one of the verification and auditing implications of Market-Chaining.
"This partnership has re-enforced BNC's position in the industry and strengthened the company's service offering making it stronger and more in-depth. BNC will be expanding the range of solutions and developer tools that we are planning to bring to the market," according to Stajnar. "This first project is the beginning of a larger project, bringing financial and blockchain data together, in an accurate and transparent way."
"We can secure any market data feed on the Blockchain in a way that does not threaten proprietary intellectual property, break existing revenue models or open up market participants to market manipulation. People trust mathematics a lot more than they trust people," says Strajnar.
The process of Market-Chaining has several benefits such as when an asset is registered by an index provider on the blockchain, (and depending on the configuration) either anybody or permissioned parties can verify whether third parties are acting legitimately when they are brokering, selling or facilitating financial products against an index. This has vast implications for auditing trade and settlement, such as offering a verification layer between them by tying together index feeds for broker quotes, trade, and settlement systems.
According to BNC, the largest benefit to institutions is the ability to shed the need for customer trust completely and to automate auditing right through the trade value chain. For the first time a mathematical protocol assumes the role of central information authority and therefore both the customer and the institution can be on an equal footing. This should give customers a huge boost of confidence in all participating companies.
Market-Chaining for indexes is ready to be applied now for exchanges and brokers, with trade and quote solutions becoming available in the new year. Both BNC and Smart Bit expect a rapid roll-out time for this line of services with provable indexes coming online from several financial institutions very early into 2016.