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Blockchain, a technology underlying Bitcoin and gaining an increasingly wider acceptance in financial settlement, is an example of a cutting‐edge technology made possible by the cloud. The key idea underlying blockchain is an algorithm allowing users to simultaneously update the cloud database while maintaining the database's integrity, all in real time. Applied to financial trading, blockchain enables brokers and other institutions that handle their orders and money to reconcile their ledgers in real time. In other words, blockchain shortens the settlement procedures from T + 3 and T + 1 (still a standard in many financial instruments today) to real time. Shorter settlement times, in turn, allow for real‐time margin calculation and lower margin‐related risks. These developments, once adopted, will lead to even more real‐time trading.

This won't happen overnight. The complexities involved in moving all trading toward real time are nontrivial. Topics like margin, securities lending, and over‐the‐counter (OTC) trading introduce time‐consuming administrative procedures or custom trades that are not perfectly suited to the standardized type of blockchain discussed at this time.

Of course, the value of blockchain extends far beyond financial settlement. It is a tool that allows multiple parties to do business together ensuring reliability and at the same time without the threat of corrupting data. The financial businesses that are likely to be affected by blockchain technology require real‐time electronic negotiations, such as over‐the‐counter trading, loan origination, and any kind of workflow that was historically done slowly due to the high degree of error and the complexity of transactions. In short, before blockchain, many tasks had to be executed by one party at a time to prevent corrupting data. With blockchain, many parties can do tasks at the same time without worrying about possible overwrites, miscommunications, and so on.