74 - The History of Electronic Markets | Tarun Chitra

Jul 19, 2021

Tarun Chitra, co-founder of Gauntlet and an expert in decentralized finance, dives into the evolution of electronic markets. He discusses the shift from traditional trading pits to modern digital platforms, emphasizing how technology democratizes access to finance. Tarun draws parallels between past market crashes and today’s DeFi landscape, highlighting both opportunities and risks. Through intriguing anecdotes and insights on topics like risk management and market innovations, he illustrates the ongoing transformation of financial systems.

Ask episode

AI Snips

Chapters

Books

Transcript

Episode notes

INSIGHT

Electronic Markets Definition

Electronic markets automate middlemen using internet communication and computation.
This disintermediation started with automating execution, settlement, and stock storage.

ANECDOTE

Regional Stock Exchanges

In the 1970s and 80s, each US city had its own stock exchange with physical trading.
The internet enabled faster price communication and competition between exchanges.

INSIGHT

Early Electronic Asset Adoption

Electronic market adoption begins with esoteric or computationally intensive assets like options.
Options required computing power for pricing and communication for liquidity, making them a natural fit.

Get the Snipd Podcast app to discover more snips from this episode

Get the app

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.

Get this episode's exclusive debrief! 👀 https://shows.banklesshq.com/p/exclusive-debrief-the-history-of

------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ 🎖 CLAIM YOUR BADGE: https://newsletter.banklesshq.com/p/-guide-2-using-the-bankless-badge ------ BANKLESS SPONSOR TOOLS:

⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum

🍵 MATCHA | DECENTRALIZED EXCHANGE AGGREGATOR https://bankless.cc/Matcha

🔐 LEDGER | SECURE YOUR ASSETS https://bankless.cc/Ledger

🦄 UNISWAP | DECENTRALIZED FUNDING https://bankless.cc/UniGrants

------ 📣 SMARTCON | Register for Smart Contract Summit 2021! https://bankless.cc/SmartCon ------

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