New Kids on the Blockchain: How Bitcoin's Technology Could Reinvent the Stock Market

54 Pages Posted: 6 Sep 2015 Last revised: 28 Jul 2017

See all articles by Larissa Lee

Larissa Lee

Wilson Sonsini Goodrich & Rosati

Date Written: 2016


Bitcoin is the first and most successful digital currency in the world. It is polarized in the news almost daily, with either glowing reviews of the many benefits of an alternative and international currency, or doomsday predictions of anarchy, deflation, and another tulip bubble.

This Article focuses on the truly innovative aspect of Bitcoin — and that which has gone mostly unnoticed since its inception — the technological platform used to transfer Bitcoin from one party to another. This technology is called the Blockchain. The Blockchain eschews a bank or other middleman and allows parties to transfer funds directly to one another, using a peer-to-peer system. This disruptive technology has done for money transfers what email did for sending mail — by removing the need for a trusted third party just as email removed the need for using the post office to send mail.

If this technology can be used for peer-to-peer money transfers, why not extend the technology to accomplish other forms of transfers? Imagine selling a house or buying a car peer-to-peer. What about using the Blockchain technology to buy and sell stocks? Stocks exchanged completely peer-to-peer could resolve many of the issues facing the stock market today, including high frequency trading and short sales. This article focuses on developing a peer-to-peer stock market system, the legal implications of such a system, and how this system will fit in with current legislation and regulation.

Keywords: Bitcoin, blockchain, stock market, Patrick Bryne, Satoshi Nakamoto, Winklevoss twins, Ross Ulbricbht, Ethereum, digital currency, cryptography, orphan blocks, proof of work, proof of stake, CPU, NXT, Ripple, colored coins, charitable proof of work, Namecoin, cryptosecurity, cryptocurrency, high frequency trading, short selling, spoofing

JEL Classification: K10, K20, K22, K29, K19, K30, K33, K39, K40, E60, F30, F31, F33, F39, G21, G24

Suggested Citation

Lee, Larissa, New Kids on the Blockchain: How Bitcoin's Technology Could Reinvent the Stock Market (2016). Hastings Business Law Journal, Volume 12, Issue 2, 2016, University of Utah College of Law Research Paper No. 138, Available at SSRN: or

Larissa Lee (Contact Author)

Wilson Sonsini Goodrich & Rosati ( email )

650 Page Mill Rd
Palo Alto, CA 94304-1050
United States

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