Blockchain
Blockchain, and the related concept of cryptocurrency, are phrases that have been thrown around a lot following the rise of Bitcoin. Blockchain technology has potential in all manner of computing-related fields. Blockchain is essentially a system for keeping records, but its relevance to trading and its investment potential are not immediately obvious.
This guide will lay out the basic concepts behind blockchain, some of the reasons for its rise and the advantages and disadvantages it carries with it for various financial instruments, especially cryptos and commodities. Also explored is how blockchain trading is evolving and some of the possible uses of blockchain beyond finance.
Best Brokers For Trading Blockchain Products
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eToro USAeToro USA LLC and eToro USA Securities Inc.; Investing involves risk, including loss of principal; Not a recommendation
What Is Blockchain?
Fundamentally, a blockchain is a form of database, or ledger, that electronically stores information. Database information is typically tabulated, appearing somewhat like a spreadsheet, and allows several users to concurrently access and filter a large amount of information.
Blocks
One of the primary aspects that separate blockchains is the way the data is structured. A blockchain groups information together into sets, or blocks, of data. Each block has a limited capacity and, when it is filled, it gets appended to the previous block. This process continues, with blocks of data chaining together to form, you guessed it, a blockchain.
These blocks, once confirmed and added to the chain, cannot then be amended. This forms a linear timeline of data as each block is timestamped at the exact time it becomes part of the chain. This is important for security and transparency in the blockchain. Blockchain trading networks have increased in popularity mostly because a combination of this and its decentralization.
Decentralization
Another important and often argued to be definitive, characteristic of a blockchain database is its decentralization. Large traditional databases manage such huge quantities of data and run several concurrent tasks by holding everything on big servers formed of many powerful computers. In these cases, one entity normally owns the property, the servers and the database, controlling the information within.
Similarly, blockchains require many computers to store their data and run their tasks. However, computers are split by geography and ownership so that many different people or groups help to operate the blockchain, with no single entity owning the database or controlling the information. This means that, when investing in blockchain trading instruments, there is less risk of a controlling entity rejecting your trade.
Each computer in a blockchain is called a node, and each node has a full record of the data stored since the database was created. For any change to be made to the chain, be it the addition of a new block or amendments to previous blocks, most of the nodes must approve the changes. This helps prevent tampering, improve security and maximizes data accuracy.
Blockchain & Cryptos
The first live implementation of the distributed ledger technology system, Bitcoin (symbol: BTC) has stolen the spotlight, especially in trading circles. But in reality, many cryptocurrencies run on a form of blockchain, providing decentralized, transparent and secure digital transactions.
Traditional currencies, be they fiat or commodity-based, are managed and distributed by a central bank or authority. This means that related data is centralized and controlled by a single entity, producing potential risks. If a bank were hacked, not only would the assets of all those holding money in the bank be at risk, but so would their personal information.
The bank could also collapse, in which case the money held by consumers may be worth much less than before, or their taxpayer money may be used to bail it out.
Bitcoin was created with these worries in mind, made to be decentralized and follow a proof of work system, which means that there are no entities involved with more authority than any others. Furthermore, it is much harder to hack as every node must agree on the correct blockchain, so one would need to hack over 50% of the nodes, a massive task. This decentralization is a key reason that many people have shifted to the blockchain.
Many more cryptocurrencies have since sprung up, following Bitcoin’s decentralized approach, and more will continue to explore possibilities.
Blockchain Timeline
- 1982 – A protocol blockchain is first proposed by David Chaum
- 1991 – Stuart Haber and W. Scott Stornetta produce further work on cryptographically secured blockchains with an aim to produce a system where timestamps couldn’t be tampered with
- 1992 – Stornetta, Haber and Dave Bayer incorporated Merkle trees into the system to associate several bits of information with a block, improving its efficiency
- 2008 – The mysterious Satoshi Nakamoto publishes a paper coining the term ‘Bitcoin’ and outlining its peer-to-peer verification and blockchain structures
- 2010 – First purchase using Bitcoin is carried out for two pizzas using 10,000 BTC, worth $41 at the time
- 2011 – BTC achieves parity with the USD and several organizations start accepting donations in BTC
- 2013 – Bitcoin market cap surpasses $1 billion and its value reaches $100/BTC. The ‘Ethereum Project’ paper is published, exploring other possible uses of blockchain
- 2014 – Ethereum crowdfunds over $18 million in Bitcoin, PayPal integrates BTC payments and 200 blockchain firms form R3, a company aimed at expanding the uses of blockchain
- 2015 – Over 100,000 merchants now accept BTC and NASDAQ tests blockchain trading shares in private companies
- 2017 – JP Morgan CEO gives blockchain a vote of confidence and Dubai announces a goal for its government to be 100% blockchain-powered by 2020
- 2018 – Meta, previously Facebook, starts a blockchain group and discusses the inception of a new cryptocurrency, IBM creates a blockchain-based platform with large banks getting involved
- 2019 – Over a million transactions per day are made on the Ethereum network
- 2020 – Stablecoins (cryptocurrencies pegged to the price of a fiat coin like USD) start rising to fame. AI is also introduced into blockchains to speed up business tasks
- 2021 – Cryptocurrencies are being used more and more in everyday practical applications from real estate to fitness and voting
- 2023 – Launch of Celestia Mainnet, the first modular blockchain, separating consensus/execution/data availability
- 2024 – Large strides in institutional adoption as BlackRock launches its tokenized US Treasury fund BUIDL on Ethereum, and HSBC introduces 24/7 gold and precious-metal trading on a blockchain.
- 2025 – Major Ethereum upgrades (Pectra in May, Fusaka in December) and $47.2B institutional capital inflows drive enterprise adoption and real-world asset tokenization to mainstream scale. CFTC approves Bitcoin, Ethereum, stablecoins as regulated collateral
- 2026 – Institutional investors adopt blockchain for strategic allocation as privacy tech and stablecoin infrastructure mature for cross-border payments.
Blockchain Trading Products
If you are wondering how blockchain can help trading, we break down a few of its uses for investors…
Cryptocurrencies
The most intuitive way to combine blockchain and trading is with cryptocurrencies. Run using blockchain systems, cryptos can be traded on a vast array of platforms through a wide range of brokers.
Most cryptos are traded as currency pairs, like forex, against a fiat or other traditional currency, typically the USD. However, many brokers also provide options to trade one crypto directly against another.
Peer-To-Peer Energy
Also called prosumer power or the crypto-trading blockchain-oriented energy market, P2P energy trading is the sale of excess energy from one consumer with the ability to produce electricity, usually from solar power, to another consumer on the same grid.
Cryptocurrency helped facilitate the start of this trading concept, with Ethereum (symbol: ETH) used in 2018 to buy power from a neighbor.
This idea can be seen in many places in the world, often using a blockchain trading energy platform to invest in renewable energy credits amongst prosumers connected to a microgrid.
P2P energy trading challenges the traditional centralized energy supply but provides users with control over where they buy or sell excess energy from or to.
Emissions Trading
Another form of trading is emissions trading schemes (ETSs), which is a government environmental policy to reduce emissions, typically carbon emissions, by selling a limited number of pollution permits to businesses. These permits must be bought by any business releasing a significant quantity of emissions, and more must be purchased if the company wishes to increase its pollution.
Beyond the direct purchase and sale of permits, financial derivatives of the permits are available to be traded on secondary markets.
Blockchain is implemented into some of these markets, both primary and secondary, to better and more efficiently connect suppliers and demanders. The format of the database also helps to record and transfer information quickly, reduce entry gates by minimizing costs and helpS against fraud and double counting of credits thanks to its transparency.
Exchange Structures
Some firms in the finance and technology sectors believe that current exchange systems could be upgraded using blockchain trading. Commodity exchanges typically rely on paper for transaction processing and verification, though some companies implement blockchain technology to automate processes and store information more efficiently.
Two notable projects are Vakt (oil trading platform) and OneOffice (gas trading platform), which have created greater transparency with their services. S&P is also using blockchain to store data and publish oil stock levels transparently and clearly.
The improved transparency of the chain, coupled with its security and confidentiality, is particularly attractive, as it could let all stock levels be public without locations being released and help track down fraudulent purchases.
It is not only oil and gas exchange markets that stand to benefit from blockchain, stock trading exchanges, derivatives markets and other commodities, such as gold or agriculture could stand to gain for all the same reasons.
Trading The Technology
Another, less direct way to start blockchain trading is by looking at those industries and companies that stand to benefit from its use and development. At the first level, there are specific technology consulting businesses that work to implement blockchain solutions. Such companies include Hive, Riot, Argo and TXQuick, though there are many more.
As crypto-systems gain traction, big tech companies and financial technology businesses have begun to aid their development. Amazon, CME and Mastercard are but a few whose shares can be invested in at online brokers.
Finally, computing hardware manufacturers potentially stand to gain from blockchain thanks to the heavy computational requirements to mine different cryptocurrencies and support the networks. More specifically, GPU (graphics processing unit) manufacturers like Nvidia have created and sold many of their products for mining purposes.
Non-Trading Blockchain Uses
Blockchain has great potential in financial trading systems, as has been proven with cryptocurrencies and many stock and commodity trading platforms. However, there are many other uses and opportunities that it provides, many of which have barely been explored to date:
- Finance and Banking – Implementation of blockchain structures with automated clearing protocols would allow transactions to be completed securely even while financial institutions are closed. There would also be less processing and verification to be carried out, significantly reducing fees for consumers.
- Supply Chains – Blockchains could be leveraged by suppliers to ensure the origins and paths of their materials. For example, De Beers has implemented blockchains to ensure the authenticity of diamonds and that fair working conditions were involved in their mining. A similar approach could be taken for the artwork trade; blockchain could verify the authenticity and track the ownerships of high-profile artwork securely and confidentially. This is already being done with digital art like NFTs, though their popularity and value has largely dwindled since their initial hype.
- Voting – Crypto-based chains could be used to reduce voter fraud and improve turnout, something demonstrated by the 2018 midterm elections in West Virginia. Votes would be very difficult to tamper with, fewer people would be needed to conduct the election and counting would be both automatic and accurate.
- Smart Contracts – These are sets of code that can be integrated with a blockchain to verify or facilitate an agreement. A set of conditions are agreed upon by users and the contract is actualized automatically once these are met. This is something widely used in blockchain trading but could spread to many other forms of deals, such as property signing or insurance. The use of smart contracts is already being leveraged when it comes to cryptocurrency lending.
- Healthcare – The security of blockchains could be applied to healthcare services. Writing medical records and updates into a blockchain would provide confidence and proof that they will not be altered. Privacy can be ensured by encoding records with private keys that only certain individuals would have access to.
- Safer Web and Data Storage – The technology can be used to encrypt personal details, passwords and data. Since the information is stored on a decentralized platform, it makes it harder for hackers to access online accounts and tamper with data. Not only that, but data storage in a decentralized environment could give companies greater access without a convoluted process or reliance on another firm’s operations.
- International Access – On many decentralized open source platforms anyone can invest. This opens blockchain trading up in India, Kenya, South Africa and many other countries. Not only that, but the technology itself can be used internationally without a specific company’s restrictions. This can help the crypto space evolve at lightning speed.
Pros & Cons Of Blockchain Trading
Transaction Accuracy
A blockchain is operated by many computers at once, often thousands, which must approve a transaction before it is carried out. This minimizes the possibility of human error when verifying the transaction and, even though computers can produce errors, more than half the nodes in the network must produce the same error for it to pass through.
Third-Party Cost Reductions
Third parties are involved in almost all verification processes, be it a minister for a marriage or an exchange for an instrument trade. Crypto-based chains, and their inherent verification process, reduce or eliminate additional costs.
Efficiency
Transactions placed through a body that only works during certain hours in the week can take several days to settle if attempted at the start of the weekend, for example. Blockchains improve efficiency by running 24/7, 365 days a year, facilitating and beginning transactions as soon as they are requested.
One drawback of some blockchains, partly due to the immaturity of the concept, is the time taken for a transaction to be completed. Bitcoin, for example, processes a small fraction of the tens of thousands of transactions approved by Visa per second, though it’s worth noting that BTC transactions are final settlements while approved Visa transactions may take days to settle.
That being said, many other cryptocurrencies boast throughputs in the low thousands of trades, as blockchain technology has improved. Tokens like Solana, Avalanche and Tron are built on blockchains that can handle thousands of transactions per second, with the potential for this to rise even higher with increases adoption.
Confidentiality
It is often thrown around that Bitcoin transactions are anonymous. Each user has a unique public key that is associated with any transactions they make, rather than any private information. This makes all transactions confidential, as users can only decode their own public keys. However, some transactions require identification, and these will link the user’s name to their blockchain address.
Security
The authenticity of any amendment or trade within a blockchain network must be verified by nodes. Once verified by the majority, and only then, can a new block be added to the chain.
Each block is also identified with a unique hash and the hash of the block prior, and any changes made to a block will also change its hash. This would make the new and the old hash mismatch, making any tampering noticeable.
Transparency
Most blockchains are decentralized and publicly accessible, with open-source platform software (available for all to see for free). This means auditors can more easily assess its security and anyone can propose changes to the blockchain’s code. The full ledger is also publicly available, allowing anyone to look at all trading in the blockchain’s history.
Technological Complexity & Costs
While blockchain trading offers reduced third-party fees, there are still great costs associated with them. The validation system in place for Bitcoin, for example, uses so much power that the entire network consumes more than the quantity of electricity annually used by many countries.
The incentive to rack up such high energy requirements comes from a Bitcoin reward for miners that add blocks to the chain. However, not all blockchains are for cryptocurrencies, so other incentives or offsets must be implemented.
Regulation
A big reason for the creation of Bitcoin and the advent of cryptocurrencies was to avoid central authorities controlling currency and its users. However, there are growing concerns that governments will try to regulate cryptocurrencies, be it directly or by criminalizing ownership. In 2021, for example, China banned the trading and mining of crypto.
With that said, China is an outlier as in recent years many major first-world countries have become more open to the use of cryptocurrency and have created friendlier regulations. Regulatory progress accelerated in 2025, with the SEC and CFTC issuing coordinated guidance to harmonize regulations on digital assets, expanding trading hours and coordinating margin requirements to promote innovation and investor protection.
How Blockchain Technology Impacts The Environment
The negative correlation between blockchain and the environment has been a popular discussion topic. The controversy stems from the security systems of blockchain technology that supports cryptos and non-fungible tokens (NFTs). In order to exist, these systems require a network of energy-hungry computers to power them.
The energy consumption required to power the Bitcoin network is enormous; it is estimated to be more than that of several small countries.
Most cryptos are built on the Proof of Work (PoW) system, which consumes a lot of energy. PoW acts as a security system for cryptos as there is no third party, such as a bank, to oversee transactions. Users must instead solve cryptographic puzzles using inefficient machines to add blocks of verified transactions to the blockchain. The system is purposefully inefficient as using and paying for large amounts of energy makes it less profitable for someone to mess up the blockchain, and the environment obviously doesn’t take kindly to intentional inefficiency.
The amount of energy needed for each transaction is also astronomical compared to alternative payment methods like credit cards. Although the exact energy costs fluctuate, Bitcoin transactions are certainly many times more energy-intensive than Visa, for example. At times a single BTC transaction has been estimated to use the same energy as 0.9 million Visa transactions. This huge energy expenditure has harmful knock-on effects on the environment, as Blockchain mining and transactions continue to be powered by coal and other carbon-intensive and polluting fossil fuels.
The interactions between blockchain and the environment go further still, with concerns being raised regarding electronic waste (e-waste). Competing crypto miners need increasingly more efficient mining hardware every 1-2 years. Bitcoin mining has been shown to consistently create over 100g of e-waste per transaction, and this is linked to the production of many damaging greenhouse gases that cause climate change.
It has also been described by Tim Berners-Lee, credited as the creator of the internet, as a fundamentally pointless way of using energy. One major concern is that mining is less efficient when the price of crypto increases. On the other hand, technological improvements have led to greatly improved efficiency for Bitcoin-mining hardware, and these advancements could mitigate some of the issues linked to energy-intensive Blockchain transactions.
Rules
The European Commission considers blockchain to be transformative and has set up several initiatives to support the development, monitoring and standardisation of blockchain technologies, including the European Blockchain Partnership and the EU Blockchain Observatory and Forum.
Beyond these initiatives, the EU has extended funding for blockchain research through its Horizon 2020 programme. The circular economy, blockchain and the environment is one of its current projects.
The European Parliament Committee on Economic and Monetary Affairs concluded in 2019 that the regulation of blockchain is not of immediate concern. However, the environmental and sustainability implications of blockchain have not been sufficiently reviewed, especially in terms of energy consumption.
Elsewhere, governments are gradually building regulatory frameworks for Blockchains and cryptocurrencies, and these could pave the way for specific legislation dealing with Blockchain’s environmental impact. For example, Vietnam led the world as a Blockchain regulator by setting out a licensing regime for crypto exchanges in 2025.
And, in the same year, the US Securities and Exchange Commission and Commodity Futures Trading Commission issued a joint statement declaring their aim to “solidify the United States as the global leader in crypto and blockchain technology.”
Environmentally Friendly Blockchain Setups
Perhaps unexpectedly, there is the potential for blockchain and the environment to work together, producing positive outcomes for social, economic and environmental sustainability.
Renewable Energy
Blockchain technology can be made more environmentally friendly by being powered by renewable energy, rather than fossil fuels, for example. Blockchain technology can also play an important role in driving the adoption of renewable energy sources like wind and solar by providing a tool to create clean energy markets. As these sources are intermittent and decentralised, new forms of energy markets are needed.
For example, blockchain can enable the smart metering of electricity generated through solar power to be recorded, traded and settled on a ledger. By trading electricity like a commodity, rather than fixing its price via centralised networks, energy prices can better react to supply and demand. This would facilitate individuals and organisations in potentially becoming both consumers and producers of electricity, ultimately reducing energy wastage and lowering costs.
Proof Of Stake
Another solution to the issues of blockchain and the environment is to swap the blockchain’s algorithm from proof of work (PoW) to proof of stake (PoS). This approach consumes minimal power compared to PoW, as the blockchain is secured through users staking their own crypto coins, on the successful operation of the network.
Climate Change
Despite the ongoing environmental concerns around Bitcoin’s carbon footprint, the United Nations (UN) has suggested that blockchain has potential environmentally friendly implications, including enabling the implementation of carbon markets and other measures designed to mitigate climate change. In a recent foresight brief, the UN’s environment agency highlighted various environmental benefits associated with blockchain.
These advantages include its transparency, as blockchain is resistant to fraud. The UN reported that unreliable data on greenhouse gas emissions can be avoided as blockchain could provide immutable records of carbon data, providing a way for nations to proactively reduce their impact on the environment. Blockchain’s positive impact on environmental sustainability has been tested in various projects by the UN, as well as other organisations.
Humanitarian Work
The World Food Programme (WFP), the largest UN agency delivering humanitarian cash, found that blockchain technology can help to ensure that money reaches those who need it without going via local banks. In addition, a blockchain tool to eliminate illegal fishing in the tuna industry was created for the World Wide Fund for Nature (WWF).
Bottom Line
Blockchain has potential, there is no doubt about it, but it is a young technology that has not yet been fully realized in many sectors. However, it has maintained momentum after its Bitcoin success, being implemented in finance for trading all instruments, including bonds, equity, fixed income funds and more obscure assets, such as emission permits. This momentum looks likely to continue, causing not only blockchain-specialized businesses but many other related companies to grow and succeed.
There are worries, however, regarding blockchain trading platforms and currencies as governments and regulatory agencies have not yet caught up with it. The main attractions of blockchain are its decentralization and confidentiality, two things authorities tend to dislike. The future of blockchain, therefore, is not clear-cut. However, if allowed to continue its development, it will likely grow and revolutionize many areas of society and business.
FAQ
What Is Blockchain?
A blockchain is a form of information database that can be likened to a ledger. Moving away from a traditional, overwritable tabular format, a blockchain sifts new information into a unique block that gets appended to the previous one. This technology is designed to be decentralized, secure and transparent.
What Is A Blockchain Trading Platform?
A blockchain investing platform uses a distributed ledger system to process trading settlements. Blockchain was first used in this way by NASDAQ in 2015, which now runs Linq, a blockchain-based trading platform that speeds up transaction verification and improves the transparency of its data.
What Blockchain Companies Can be Traded?
Many companies specialize in blockchain solutions all over the world, from Australia to South Africa to China. These companies can be traded directly on their respective exchanges. For example, Riot Blockchain can be traded publicly on NASDAQ.
Can You Trade Gold Using Blockchain?
All investing could theoretically move to crypto-based networks, including securities trading for commodities such as gold and platinum, company stocks and options. There are many online brokers and exchanges available that currently link such instruments, including gold, with cryptocurrencies to be traded on a decentralized network.
Is Blockchain Secure?
This technology is essentially a decentralized ledger system, meaning that the computers operating the database are spread amongst different people and places throughout the world. If someone were to attempt to hack the system, they would need to hack more than half the computers within the system, which is harder than hacking a singular server system in a centralized network.
Is Blockchain Bad For The Environment?
The controversy centres on the underlying proof of work blockchain technology that requires a network of electricity-consuming computers to power cryptocurrencies. Running all these computers requires an extortionate amount of energy, usually powered by fossil fuels that have a negative knock-on effect on the environment.
However, proof-of-stake blockchains remove most of the energy requirements and global organisations believe the technological advantages of blockchain can be used to benefit the environment in the long run.
What Can Be Done To Offset Blockchain’s Carbon Emissions?
Blockchain and the environment need not fight forever, as the technology can be made more environmentally friendly through the use of renewable energy sources. Switching to the proof of stake (PoS) system can also reduce the energy cost of transactions by up to 99.95%.
Otherwise, you can choose alternative cryptocurrencies that use less energy per transaction. Specific countries can also overhaul their output by following in China’s footsteps and implementing bans on carbon-intensive crypto mining, heavily reducing the blockchain’s environmental impact.