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While many companies dream of becoming “the Uber of” some industry they wish to disrupt, BitGo is trying to become the next Depository Trust & Clearing Corporation (DTCC) of an industry that many institutional investors feel needs a lot more trust and clarity – the cryptocurrency industry.
The settlement issue
When you buy or sell stocks, it appears as a simple trade at the push of a button or a call to your broker. However, on the back end, there is a meticulous process of actually taking your sold stock and moving it to the portfolio/brokerage of the purchaser, transferring the funds the other way, making sure the transaction is properly recorded and not duplicated (or fraudulent), and more. To ensure the integrity and ease of this process, it is done by a single organization, the DTCC.
Traders and investors do not have to worry about settlement of trades and clearing of funds because of this ironclad knowledge that the DTCC will take care of the back end of each trade, every time and without fail. Your funds or stock holdings are never exposed to theft or fraud because the DTCC completes settlement for them before your assets ever leave the safe custody of your brokerage. In the US alone, DTCC performs around 1.4 million settlements per day.
In crypto, by contrast, settlement of trades happens on-chain of the blockchain used in the transaction (e.g., if Bitcoin is traded for Ethereum, the trade needs to be registered in both chains). While the settlement process takes place (which could take hours), your crypto assets are exposed in “hot” wallets – wallets actively connected to the Internet and thus much more prone to hacking and theft than your “cold” wallet,