Nasdaq is using the technology that underpins bitcoin – the blockchain – to allow international residents of Estonia vote in shareholder meetings even when they're abroad, in a test that could have wider implications for the adoption of the technology.
Estonia offers e-Residency which is a transnational digital identity available to people who start a business online in the nation. But if those people own stock in an Estonian publically listed firm, they need to be physically present to vote in shareholder meetings or nominate someone else to do it for them, an arduous process.
But the Nasdaq, using blockchain technology, is hoping to change that.
Blockchain works like a huge, decentralized ledger for the digital currency bitcoin which records every transaction and stores this information on a global network so it cannot be tampered with. It's this technology that Nasdaq is now applying to shareholder votes.
In this case, a user would have a so-called private key, a unique long number given to them provided they are listed on the e-Residency records held by the Estonian government. This record will be sealed on the blockchain and cannot be tampered with. This private key would need to be used to validate yourself whenever you go to vote in a shareholders meeting online.
Essentially the blockchain would allow companies to know for sure that the person voting online is the person they say they are, due to the private key needed to take part.
"The decentralized nature of identity manager makes it harder to falsify identity and much more difficult to duplicate a vote as there is one ledger that is the single source of truth," Alexander Shelkovnikov, corporate venturing and blockchain lead at Deloitte, told CNBC by phone.
The blockchain used by Estonian companies would be private and only accessible to those who are using it. The companies that would take part would be on Nasdaq's Tallin Stock Exchange, Estonia's only regulated securities market. The pilot is aiming to launch later this year.
Blockchain has been a big buzzword among major financial institutions. A number of banks have been looking into using the technology and investing in start-ups in the space. And this is not the first time that Nasdaq has used the blockchain. Last year, the firm used the blockchain to complete and record a private securities transaction.
Shelkovnikov said that this is not just an Estonian-specific use case, but could be used for different processes, including voting in elections.
"Electronic voting, it does not just apply to stock exchange, but it could apply to what we do regularly by voting for individuals or parties," Shelkovnikov said.