The 24/7 global stock market is impossible on today’s blockchain

The current state of blockchain technology presents significant challenges for the establishment of a 24/7 global stock market. The existing infrastructure is characterized by inadequate throughput and systematic issues such as front-running. These limitations hinder the ability to meet the demands of real-world finance, which requires rapid transaction finality and fair ordering.

Inadequate Throughput

The current blockchain systems struggle to handle the volume of transactions needed for a global stock market. Throughput refers to the number of transactions that can be processed in a given time frame. The existing technology does not support the high transaction rates necessary for real-time trading, which is essential for a functional and competitive stock market environment.

Systematic Front-Running

Another critical issue affecting blockchain’s viability for stock trading is the prevalence of front-running. This practice occurs when someone takes advantage of advance knowledge of pending transactions to execute their own transactions first, thereby profiting at the expense of others. Front-running undermines the fairness and integrity of the trading process, making it a significant barrier to adopting blockchain for real-world financial applications.

Demand for Sub-Second Finality

In the world of finance, speed is paramount. Transactions must be finalized in sub-second timeframes to facilitate fast-paced trading and maintain market efficiency. Current blockchain solutions do not offer the rapid confirmation times required, which can lead to delays and inefficiencies that are unacceptable in a global stock market context.

Fair Transaction Ordering

Equitable transaction ordering is crucial for maintaining trust in any trading system. When transactions are not ordered fairly, it can lead to market manipulation and a loss of confidence among investors. The existing blockchain infrastructure’s inability to guarantee fair transaction ordering poses a significant risk to the establishment of a reliable and trustworthy trading environment.

From author

The limitations of blockchain technology in its current form raise critical questions about its suitability for future financial markets. The challenges of throughput, front-running, finality, and transaction ordering highlight the need for advancements in blockchain infrastructure. Addressing these issues will be essential for realizing the vision of a decentralized and efficient global stock market.

Impact on the crypto market

• The current blockchain limitations could hinder broader adoption of cryptocurrency and decentralized finance.
• The inability to support a global stock market may lead to a reliance on traditional financial systems.
• Issues like front-running could damage the reputation of blockchain technology among institutional investors.
• The demand for faster transaction finality may drive innovation in blockchain technology to overcome current limitations.
• Fair transaction ordering remains a critical focus for developers and stakeholders aiming to build trust in blockchain applications.