The first commercial exchanges opened in Europe in the 17th century transformed commerce permanently. Hundreds of years later, brokers still meet in set locations to swap a number of items: commodities, currencies, securities; many centuries-old methods are still used to uphold this system. Since the advent of cryptocurrencies, however, the traditional financial world has been turned on its head. Decentralization has made it possible for individuals to send money across the world without paying fees, to trust strangers, and to move economic power to the people and away from large financial institutions.
This began mostly with the Bitcoin revolution, which in the past few months has seen an explosion in both users (Coinbase for example has seen a drastic 400k new users in the last month or so) and worth, all while major banks and governments seem to be wrestling with how to handle a cryptocurrency economy that has emerged under their noses and outside the grasps of their coffers. Now, with several coins traded on websites like Coinbase and millions (in USD) of dollars circulating online, it appears another stage in the evolution of cryptocurrencies is upon us.
Online cryptocurrency exchanges have been able to grow comfortably partly as a result of the simple truth that they are the only people doing what they’re doing. Now an online exchange has come along that will not only allow people to trade as they do on Coinbase but also to trade traditional commodities and securities, represented on the LEP through arguably its most exciting innovation to the current state of fintech.
Blockchain on the Membrane
Next month LucidExchange, a new company that aims to make major innovations to the ways not only cryptocurrencies — but commodities, securities, and stock as well — will launch what could be one of the biggest developments in financial technology of the decade.
LucidExchange is making a bold statement with the launch of their LucidExchange Platform (LEP). Exorbitant fees, waiting for confirmation, price changes, etc. all plague traders on current exchanges, who often also have to tie their money up with their broker while trading. On the LEP, users will have access to and control over their money, the ability to make instant and secure transactions, and be free from paying heavy percentages in fees for third parties.
The LucidExchange Platform is an online exchange powered by the LTCC (liquidity, trust, community, control) protocol, an open-source code developed by Lucid to allow for decentralized trading while ensuring users security, fund-control, and liquidity in a transparent environment. Furthermore, exchanges made on the LEP will take place through smart contracts built on blockchain technology.
Not only does the smart contract allow for trades in currencies (crypto and fiat), it allows for trades in commodities, securities, and in the near future, even derivative contracts. The smart contract makes all of these trades possible online with an added bonus: many of the errors and inconveniences of current traditional exchanges are eliminated as a result of no longer having to pass through traditional third parties for confirmation. Now with a blockchain backed exchange, the transparency is built in: as such, so are margin requirements, which are generated automatically with a smart contract. LucidExchange allows for instantaneous settlement, avoiding the usual one to three business day wait and avoiding post-trade price movement that makes it hard for the average Joe to get involved in commercial trading.
With margins generated with every contract, the issue traditional traders experience with shifting margins and unintended profits/losses is absolutely eliminated. So there will be time restrictions: with an online exchange physical presence becomes unnecessary to completing a trade, and LEP will be live 24/7! What this will mean for traditional exchanges, not to mention prices on them, is still unseen, but will surely bring an immutable change to the status quo.
Let’s say for example that you want to trade an asset on LucidExchange Platform, but the asset is not currently traded on this exchange. Not an issue! LucidExchange has developed a patented technology that allows for users to purchase (via LucidExchange) the asset from a traditional exchange, deposit it in the Lucid Asset Vault, and receive tradable, asset-backed digital token.
All trades on the LEP will take place in TDR, the native token of the LEP. TDR tokens are part of what make smart contract transactions possible, and allow for the LEP to serve as the nexus of traditional exchanges and online crypto exchanges. For the benefit of LEP users, initially all TDR will be pegged to a USD value, and can be traded for other TDR or asset-backed tokens. LEP users can also purchase their TDR with BTC, ETH, and LTC.
While purchasing TDR is inherently riskier than buying a fiat currency or another commodity, the usefulness of this innovation will likely not dishearten the investors of the future who bought into BTC when it was still worth cents on the dollar. Those who have already bought into crypto will also be attracted to the LEP, which hopes to keep transaction fees below $2USD at the start while moving to totally eliminate them. Currently, third party groups that certify and record trades made on traditional exchanges make billions annually, while Coinbase itself also takes a sizable fee for every buy or sell.
What’s On the Horizon
LucidExchange will operate its exchange as an SEC registered Broker-Dealer, and in so doing will eliminate for the thousands of potential-users out there the obstacles currently weighing on traders and barring those without capital for fees and margins from participating on their own. On the LEP, even stock can be traded fractionally, making it possible for anyone to begin trading even if they do not have the capital to buy whole shares of big-ticket stock.
Fintech is going through tremendous changes in the 21st century, and LucidExchange, through its innovative new asset-backed token and blockchain- secured online exchange — might have brought us to the cusp of a new explosion in online trading. Secure, straightforward, and stripped of red-tape it seems that LucidExchange is posed to do for exchanges what blockchain did for cryptocurrency: put its control with the people and away from centralized interests, with minimal cost and maximum efficiency.