Hence, it has led to the emergence of security tokens, derivatives and other kinds of non-fungible assets for executing trustless transactions through a distributed ledger. However, the trust factor needs more critical attention as the exchange platform itself serves as a third-party custodian of data and funds of users. Since cryptocurrency exchange platforms stand separate from the mainstream financial system, there is a need to bridge the gap between traditional financial assets and cryptocurrency assets.
The huge opportunity in the global derivatives market has led to a lucrative opportunity in P2P trading. However, retail investors face huge barriers to entry for accessing the derivatives market. Hence, they opt for the services of third-party brokerages by paying a high commission and exposing themselves to fraud or misconduct.
P2P exchanges are a blessing in disguise as it provides more transparency and removes the need for intermediaries in the system which improves the whole scenario. Bolstered by the digitization of financial assets gaining adoption in the mainstream, trust and accuracy is ensured through an immutable ledger powered by a smart contract which keeps note of all the transactions executed. The authenticity of every user is also verified through rigorous checking.
Through the use of P2P exchanges, retail investors can access the global derivatives market at an affordable cost. Investing in different types of financial assets such as stocks, commodities and bonds becomes decentralized and transforms the entire ecosystem.
Hence, the derivatives market will benefit from the adoption of blockchain technology which guarantees a transparent and trustless environment promoting automated execution of trades through an immutable distributed ledger. It will bring a positive change to the business of P2P exchange development as a whole.
