Lessons from the 1987 Market Crash

Tarun Chitra is co-founder of Gauntlet, a financial modeling platform for crypto. Tarun is a thought leader in the space and is an expert in a variety of topics surrounding DeFi.

This week, we discuss the history of electronic markets, and how we’re in the third wave of this phenomenon.

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Bankless Podcast #74: The History of Electronic Markets Guest: Tarun Chitra

We’re all familiar the image of traders in the pits of the New York Stock Exchange, holding up tickets and shouting out orders to one another. This is the backdrop for Electronic Markets 1.0, when ‘open outcry’ was the norm for the exchange of equities. When internet technology first emerged, it was brought to these markets, such that geographically distinct markets were fused by the instant communication of prices, bids, and offers.

New technologies come quickly to the markets, giving an advantage to those who adopt the fastest. Alongside traders and brokers are the technologists, the quants and computer scientists who leveraged their understanding of networks to revolutionize trading. This first wave of electronic markets lasted until the dawn of personal computers, home internet, and E-trade.

This second wave further revolutionized modern exchanges, distributing public access while consolidating liquidity. Synergistic with the dot-com boom, this explosion of retail investing once again turned exchanges on their heads. Look around now, and observe that we are in a third wave of new technologies applied to markets: Electronic Markets 3.0. Catalyzed first by mobile phones and now DeFi, the markets have once again been uprooted and fundamentally changed.

What does this all mean? Where do we go from here? How do we adjust for scaling complex markets? Well, listening to what Tarun Chitra has to say about it isn’t a bad place to start.

------ Topics Covered:

0:00 Intro 7:00 Tarun Chitra 10:40 A History Lesson on Markets 17:45 Patterns in Electronic Markets 20:55 Electronic Markets 1.0 29:09 Options and Removing Lawyers 1.0 38:08 Experimenting and Crashes 1.0 46:19 New Players & Regulation 1.0 52:19 Electronic Markets 2.0 1:00:08 ETFs and Consolidation 2.0 1:14:26 Before and After 2.0 1:23:00 Removing Lawyers 2.0 1:28:00 Electronic Markets 3.0 1:37:40 Experimenting and Crashes 3.0 1:46:07 Removing Lawyers 3.0 1:52:50 New Risks 3.0 2:00:35 Financial Crisis 3.0 2:09:10 Closing & Disclaimers

------ Resources:

Tarun on Twitter https://twitter.com/tarunchitra?s=20  Gauntlet Network https://gauntlet.network/  Inside Job: The Looting of America's Savings and Loans https://www.amazon.com/Inside-Job-Americas-Forbidden-Bookshelf-ebook/dp/B013S42VF6  More Money Than God: Hedge Funds and the Making of a New Elite https://www.amazon.com/More-Money-Than-God-Relations/dp/0143119419  When Genius Failed: The Rise and Fall of Long-Term Capital Management  https://www.amazon.com/When-Genius-Failed-Long-Term-Management/dp/0375758259 

----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research.

Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures