Although most equities and traditional commodities today are not primarily represented on blockchains, a few are, such as by the Swiss exchange Sixth. In this system, however, to address settlement and custody risk all assets traded are held on blockchains. For instance, when the pair being traded is bitcoin against dollars, bitcoin is, of course, already on a blockchain and dollars would be on a dollar stablecoin blockchain. As part of the process of submitting a bid or ask, the asset is transferred to a wallet on the native blockchain of that asset. But such wallets are created to be under joint custody of the exchange and the trader – so-called “multisig” wallets. Their value can only be transferred out by cooperation of those two entities.
How Exchanges Can Be Free of Risk
