And Nasdaq isn't the only entity to explore the advantages of Bitcoin-inspired technology in securities trading. In April, Overstock (OSTK) filed a prospectus with the Securities and Exchange Commission indicating it may issue up to $500 million in stock or other securities as digital securities utilizing a blockchain-like distribution ledger system.
Judd Bagley, Director of Communications at Overstock, said the systems being proposed by his company and Nasdaq appear to be quite similar and offer comparable advantages to investors. "When trades settle on a decentralized ledger, such as a blockchain, the settlement happens within moments as opposed to the three-day status quo," he said, referring to the T+3 standard currently in place by which investors generally settle security transactions in three business days.
Bagley added that another advantage is proof of ownership in such systems. "Somebody who buys a share of regular stock in the status quo really is not actually buying a share of stock. What they're buying is like a contractual right to a share, they don't own the share itself, it's really complicated," he said. "In this system, each person has unambiguous ownership of a share."
The New York Stock Exchange's approach to Bitcoin will not be focused on underlying technologies but instead on the product itself.
NYSE participated in Coinbase's $75 million investment round, closed in January, with the hope of bringing transparency, security and confidence to what NYSE President Tom Farley called an "important growth market" in a statement. "We look forward to supporting Coinbase's growth utilizing our global distribution capabilities and market expertise," he said.
Just days after the investment announcement, Coinbase launched Coinbase Exchange, the first regulated bitcoin exchange in the United States. According to its website, 30 U.S. states and territories, including Puerto Rico, are supported. In April, it launched the exchange in the United Kingdom.
The New York Stock Exchange has not yet made clear its plans for Coinbase and Bitcoin, and representatives of the firm declined to comment. But given its experience - and that of its parent company - in running exchanges, indexing, collecting data and tracking assets, its involvement could bring legitimacy to digital currency.
"The reputation of the New York Stock Exchange definitely adds to the reputation of Bitcoin and helps to take away the stigma," said James Angel, a professor of finance at Georgetown University. "Indeed it brings an enormous amount of technology and regulatory expertise that can be quite invaluable."
While the entry of Nasdaq and NYSE into Bitcoin and its underlying technologies is something investors should keep an eye on, change won't happen overnight. Angel pointed out that while there is a lot of room for improvement in current systems, individuals largely hold stocks in digital form already, and U.S. clearance costs are already among the lowest in the world.
Bitcoin is a new and exciting technology, and while some applications will succeed, others will not. "It's an area where investors should be very careful in their investments," Angel said.