In this example, a stock exchange, banks, corporations, brokerage houses, and auditors are members of a securities trading consortium. Each participant is running a QEDIT node that is connected to an enterprise blockchain designed to enhance capital market efficiency and reduce clearing and settlement times from T+2 to T+0.
When securities are issued by a bank or corporation on the primary market, their QEDIT node creates security-backed tokens for subsequent trading on the secondary market. A ZKP is generated to authenticate the issuance as defined by the rules of the exchange and, if required for regulatory compliance, the details of the issuance are made public on the ledger.
In parallel to the issuance of security-backed tokens, the stock exchange can use its QEDIT wallet to privately issue and sell tokens representing currency, which are used by traders as a medium of exchange on the secondary market. When ZKPs are generated for these purposes, other nodes on the network can validate the integrity of the proofs, but cannot learn any confidential information about the transactions.
Traders in the secondary market can use their wallet’s built-in atomic swap functionality to execute asset transfers. QEDIT’s atomic swap protocol enables buyers and sellers to communicate directly, bypassing clearinghouses, and construct a transaction that gets committed to the blockchain upon signing by both parties. These transactions include a ZKP that attests to each party’s ability to transfer its assets to the other party. Once the off-chain construction of the swap is complete, the transaction is committed to the blockchain and immediately settled. ZKPs generated for atomic swaps provide security guarantees against double spends and, with the exception of the transacting parties, no other nodes can view private transactional details.
Each wallet owner possesses private view keys that reveal their confidential transactional history. These keys can be shared with authorized third parties, including auditors and regulators for compliance purposes.
As demonstrated in the example above, a Zero-Knowledge blockchain eliminates the need for manual reconciliation of accounting discrepancies between independently maintained ledgers. QEDIT’s privacy layer ensures a safe trading environment by keeping sensitive financial details off the blockchain, while atomic swap functionality eliminates the need for intermediaries and reduces clearing and settlement time to T+0.