Blockchain-Enabled Fintech Innovation: A Case of Reengineering Stock Trading Services

Abstract

As it plays a key role in industrial and commercial development, the stock market has significant impacts on a country's economic growth; the stability of the stock market is therefore very important. However, the current stock-trading system is centralized, and investors have to participate in trading stocks through intermediaries/dealers, consequently causing problems such as high transaction fees, potential manipulation by intermediaries/dealers, long settlement times, and data protection issues. The advantages of blockchain technology, such as immutability, improved security, transparency and efficiency, not only make blockchain and fintech inextricably linked, but also shed light on innovations of existing stock-trading systems. This research aimed to alleviate the transaction costs, data storage security, and centralized system failures caused by the original centralized stock trading system through the blockchain-based stock trading prototype innovation/renovation of stock trading services. Further, it explored the application of blockchain in the field of financial technology. In order to prove the feasibility of a decentralized blockchain-based stock trading service, in the research methodology, this study first drew the architecture of the system through object-oriented analysis, followed by the flowchart of each function and smart contract. Finally, based on each flowchart, a blockchain stock system was developed to replace the centralized stock trading service in a decentralized, transparent, tamper-proof, and secure manner. After proposing the design and implementation details of a blockchain-based system with required service functions, we performed functional/performance tests and theoretical analysis of the system, confirming its feasibility, applicability, and value. The research results showed that our system has the characteristics of blockchain decentralization, which can alleviate the problems of transaction fees, broker manipulation, and data storage security encountered by existing stock trading services.