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Bitcoin is a cryptocurrency that has made a colossal impact on the global financial scene over the last decade, and on the foreign exchange markets in particular. Bitcoin is volatile, but it is the underlying creative technology that has the potential to create the biggest impact on the Forex industry. Thibaut de Roux monitors developments in blockchain technology and the potential of blockchain to impact financial markets globally. In the short video, view the origins of Bitcoin.

Market Decentralisation

Growth in blockchain technology is stratospheric. A market valued by experts at around $210 million in 2016, it may be worth as much as $2.3 billion by 2021. Some industry pundits estimate the figure to be much higher. As far as Forex is concerned, blockchain offers the opportunity to decentralise record-keeping, simultaneously securing data yet also making it widely available. This can revolutionise the FX market for smaller traders and start-ups. Read an overview of the current FX industry in the attached PDF. The dominance of large banks and institutions is being challenged in this new order, with opportunities for small operations and individuals to bypass them and develop innovative ways of trading. The infographic illustrates large venture capital investments in blockchain technology.

Improving Security

Availability of data may increase security. Blockchain ledgers are virtually impenetrable for a hacker, which counters one of the biggest challenges in the financial markets today: cybersecurity.

Low Transaction Costs

Transactions fees were originally in place to guarantee security, but blockchain will fundamentally alter this. Availability of data will remove the stranglehold of the banks and render some of their services and the attached fees completely obsolete.

Major Players

Many of the current big names in blockchain are working in the financial markets, especially Foreign Exchange. Players such as 360 Blockchain and Atlas Cloud Enterprises are bent on making blockchain much more widely available through innovation especially aimed at cryptocurrency and security. It is highly likely that over time, large financial institutions and banks will become involved in blockchain as it is not something they can afford to ignore. This will alter the FX market further still, increasing opportunities and openings for all sorts of businesses. Foreign Exchange will become more transparent and readily accessible, and this will produce a slightly paradoxical situation where accessibility will also offer enhanced levels of security. Blockchain will usher in a brave new world for the Foreign Exchange markets, but its influence will be felt far beyond Forex over the coming years.