Peer-to-peer transactions and real-time settlement of digital securities

Together with our new partner CashOnLedger, we now enable complete peer-to-peer transactions of digital securities, which are settled almost in real-time. In this blog post we explain how this works and how all parties benefit from it.

The settlement process for traditional securities transactions

 

Link to original study

 

The process of a traditional securities transaction consists of three phases. First, a trading venue, such as a stock exchange, brings two people together, with one person wanting to sell a security and the other wanting to buy a security. Once the (1) trade is agreed, the (2) clearing of the securities transaction begins. The so-called (3) settlement represents the final phase of a securities transaction. At this point, the securities are finally delivered. In each of these three phases, the intermediary companies invest a lot of time and effort. This generates costs.

 

Blockchain enables real-time settlement

Together with our new partner CashOnLedger, we are using the blockchain technology to significantly simplify this process and increase efficiency. With traditional securities transactions, the securities transaction process takes several hours - sometimes even days. A completely digital securities transaction process, on the other hand, carries out the settlement of digital assets almost in real time.

 

Link to original study

 

In this process the buying and the selling person find each other on a market place. They trade a digital security based on the Cashlink infrastructure and managed decentrally by a Smart Contract. The transaction of the digital security is handled peer-to-peer: With the help of CashOnLedger, the buying person sends the agreed amount in the form of digital euros to the Smart Contract. This automatically triggers the transaction of the digital security at the same time. The buying person therefore receives the security within a few seconds. The Smart Contract also sends the money to the selling person almost in real time. Thanks to the cooperation between CashOnLedger and Cashlink, the two trading parties can thus carry out their digital securies transaction decentrally and without intermediaries from the beginning to the final conclusion. In addition to euro, other fiat currencies such as US dollar or Swiss franc are also available for settlement.

 

"This year, a hot topic will be on top of the agenda: the digital euro on a blockchain basis," explains Philipp Sandner, Professor at the Frankfurt School Blockchain Center. "CashOnLedger is one of the first startups in Germany to make the digital and blockchain-based euro usable. No so-called stablecoins are used here, but actually the euro, which is to be issued on the blockchain by means of an e-money licence".

 

Who benefits from the partnership between CashOnLedger and Cashlink?

The advantages of the cooperation for users are apparent. There is no need for different intermediaries to spend time and effort, therefore a decentralised securities transaction can be carried out more cost-effectively. Moreover, the automation of the settlement through the Smart Contract takes place almost in real time and represents an immense time saving. The automation also makes settlement possible 24/7.

 

What are the four key-learnings of the cooperation between CashOnLedger and Cashlink?

  1. Blockchain technology enables the settlement of digital securities almost in real time.
  2. By using a "new" technology, all participating actors benefit from an efficiency advantage.
  3. CashOnLedger and Cashlink show through their cooperation that reasonable application scenarios for programmable money exist. The Euro on Chain is therefore not an abstract construct but can already be used.
  4. Thanks to the cooperation between CashOnLedger and Cashlink, digital securities transactions can be carried out decentralized from start to finish.

 

We are delighted to welcome CashOnLedger as a new partner in the ecosystem and look forward to working together to simplify the securities transaction process for as many people as possible using our infrastructure.