Welcome to this look at the resistance to transparency on the Blockchain. Let's take an example. The market for corporate bonds shows the complexity of transparency as a strategic risk. In the last century, corporate bonds were regularly traded on exchanges like the New York Stock Exchange. But over time, this market moved almost entirely to the over-the-counter market where arrangements were done broker to broker. Most trades are now organized in phone conversations or through Bloomberg chat. Normally, active traders, most likely the regular customers, get the better prices. Dominant dealers control liquidity so, often, they are the price maker in this situation. Dealers have margins to protect and buyers, sellers, and issuers often pay the price. In 2002, there was a lot of resistance to the Trade Reporting And Compliance Engine, known as TRACE. TRACE was a program developed by the National Association of Securities Dealers. It allows for reporting of over-the-counter transactions relating to eligible fixed income securities. The goal is to create greater price transparency amongst market participants. Despite opposition, there's ample evidence to show that market prices become far more precise after introducing TRACE. More accurate and more efficient pricing generally benefits all players because poor pricing increases risk. If new technology can improve the market, then why is there such pushback to using the Blockchain? The answer is transparency. Transparency increases the risk of firms imitating each other's trading strategies. So, let's look at one example from the mutual fund business. They're required to publicly disclose their holdings regularly in what's called 13F forms. But the published information is usually delayed to hide activities and protect the competitive advantage. Short-term institutional traders also spend time concealing their trading activities. Instead of trading a large quantity in one go, they use complex computer algorithms that shred their large orders into tiny increments. They do this to avoid detection by the market at large. The longer they spend working their orders over a day or a week or a month, the more likely other smart algorithmic traders are to detect these orders and move the price against them. Over the last 20 years, plenty of firms left the public equity markets because of the risk of disclosure and inflexible corporate governance requirements. The Sarbanes-Oxley Act increased the number of firms going private. Some CEOs considered its requirements to reveal business information, as well as their salaries, as competitive and reputational threats. Blockchain's transparency may be viewed, to these executives, as a hefty risk in the financial world, but it can be really useful in areas such as voting. When we think of voting, we usually conjure up images of democratic political elections where privacy is essential to that process so that voters can't be intimidated and the elections remain fair. But in other cases like, say, a shareholder's assembly, a public vote may be desirable. Blockchain-based voting involves using digital single-issue tokens to eligible voters. Voter manipulation on the Blockchain is difficult because distribution of the token supply is controlled and auditable. This proves valuable because shareholders may want to know whether their proxy votes were used as promised. Furthermore, voting on a Blockchain increases participation by making it easier to cast a vote. The arguments we presented here may sound like we're arguing against using Blockchain, far from it. The truth is, we've only just scratched the surface of Blockchain's potential. Existing Blockchain technology can still address lots of the transparency issues highlighted here as we'll discuss in our next video.