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When will smart contracts go mainstream? Recent events have shown that it can happen in the nearest future. In August, Barclays has announced a blockchain hackathon, the World Bank has ordered the creation of a blockchain-based bond. In July, multinational Spanish banking group BBVA provided a corporate loan of €100 using blockchain. At Credits, we analyze market events and feel very optimistic about smart contracts as a future of financial operations.

World’s first blockchain bond

A few days ago, the World Bank authorized Australia’s Commonwealth Bank (CBA) to issue a blockchain-based bond. It took less than a year from the first CBA announcement to the introduction of the final product bond-i. To develop their solution CBA uses the private Ethereum-based blockchain. Legally verified smart contracts will govern the bond, created, allocated, transferred and managed using distributed ledger technology.

It is a good example of the global success based on the early adoption of innovative technologies. Since CBA is the largest bank in Australia and New Zealand, the bond will be available on the global market. The bank now becomes a recognized leader and market innovator.

In addition, it is just a first step towards seamless blockchain usage for obligation processing. CBA started blockchain adoption approximately a year ago. They picked Ethereum as the best solution available at that time. Today the fast developing blockchain industry offers better solutions, such as Credits, that e significantly improved the speed of blockchain, its safety, and privacy.

Some experts criticized the concept of the private blockchain. Our opinion, that public Ethereum involves more risks for CBA project, such as smart contract errors. The transaction speed and cost in the network is unpredictable. A solid solution for bond processing will require public blockchain, which allows to set privacy level, write easy and safe smart contracts and process transactions effectively.

Smart contracts for derivative processing

Financial markets use derivatives to transfer potential risks from one entity to another. Derivatives are agreements with very certain terms, which could be easily written in smart contracts. There are two related tendencies: the standardization of derivative practices and adoption of a distributed ledger and smart contracts by the industry.

A year ago International Swaps and Derivatives Association issued a document “Smart Contracts and Distributed Ledger – A Legal Perspective”. ISDA explored new technologies, which potentially transforms how derivatives are executed and managed through the entire lifecycle.

Two months later ISDA published the Common Domain Model (CDM), which provides common terminology, data sets, and processing standards designed to facilitate interoperability between financial organizations and digital technologies. It is focused on a distributed ledger and smart contacts as a potential solution that can help to alleviate costly and inefficient existing technologies.

Barclays, the second largest British bank, supported the CDM and claimed that its adoption can increase efficiency by 25% in clearing space if banks cooperate. In September 2018 Barclays is sponsoring “DerivHack” hackathon together with Deloitte, ISDA and Thomson Reuters. The aim of the event is to apply blockchain technology to the ISDA Common Domain Model. Goldman Sachs also tests ISDA standard, seeking the solution to mitigate increased regulations pressure by common data standard combined with shared ledgers.

As an agile, safe and fast blockchain, Credits supports product and portfolio building, transaction processing, permissions and other features of proposed distributed ledger. In this model, banks issue products in the blockchain network and manage its circulation. The solution enables smart contracts to program such parameters as the amount, term, par value, start time, suspension, locking out possibilities, liquidation.

Blockchain loans

There are many blockchain applications related to lending: shared credit histories, KYC, loans in cryptocurrencies, automated processing of loans, insurance, microcredit peer-to-peer solutions.

Blockchain improves corporate loan processing that usually involves several parties such as lenders, borrowers, trustees, insurance organizations and others. Distributed ledger guarantees transparency and consistency of the procedures for everyparty involved. Smart contracts streamline interactions between parties, automate and optimize procedures.

Spanish banking giant BBVA has already processed several corporate loans by blockchain replacing existing loan settlement architecture. In July 2018, it facilitated the EUR 100 million bilateral loan. Bank intends to take full advantage of the new technology that increases speed, tractability, and transparency of contracting. The bank implements private blockchain for the negotiation process and completion of conditions between parties, and Ethereum public blockchain for immutable record keeping.

Credits makes it possible to use advantages of blockchain technology for any lending operations, from the processing of corporate loans to issuing of cryptocurrencies for personal loans.

Highly competitive and regulated financial industry carefully considers important innovations. It’s generally recognized, that smart contracts bring many advantages to automatization of banking processes when it comes to the interaction of several parties. Banks, which applied Ethereum, claim that the blockchain is still not mature enough. At the same time blockchain technology made considerable progress with speed, security, privacy, and manageability. In the nearest future smart contracts supported by new platforms, including Credits, will become a standard industry solution. 

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What does it take for Bitcoin to achieve mass-adoption?

CryptoCoinPrediction.com is not responsible for the article’s content or accuracy and may not share the author’s views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

What does it take for Bitcoin to achieve Mass-Adoption?

The biggest obstacle for Bitcoin right now is, that so few people use Bitcoin. But why do so few people actually use Bitcoin from a day-to-day basis? Well, the answer is, because so few people use Bitcoin. That might sound a bit confusing right away, but I will explain myself.

Bitcoin has the obstacle to overcome, same as Facebook. Facebook became so valuable, because literally every friend of yours, and their parents where using it. If no one used Facebook, then I really doubt it would be nearly as valuable to humanity as it is today.

The same exact thing also applies to Bitcoin. What makes money valuable, is the fact that you can pay anybody for anything with it. Good luck paying your local supermarket in Bitcoins. It just doesn’t make sense to do so.

This is also called the network effect. It sates, that a system is only so valuable, as the number of people using that system.

So, let’s dive into the 3 deciding factors, that must happen for Bitcoin to fully achieve mass adoption.

First, of course, is the support by a big corporation or even country. For example, if a big company like McDonalds starts to accept Bitcoin, then people would be more inclined to make purchases with Bitcoin. This makes total sense, because why would anybody adopt the usage of Bitcoin, if you couldn’t make any real-world purchases with it? Exactly, it doesn’t make any sense whatsoever.

The first point was pretty obvious, so let’s look at the other deciding factors, that are crucial for Bitcoin to be mass-adopted.

Did you actually know, that a third of the world’s population, 2,5 million adults to be precise, do not have access to the banking system? Yeah, what people in the first-world countries take completely for granted, isn’t all that common all around the world: A bank account. On the other side, many more people in these third-world countries do have mobile phones, but no bank accounts. So, what if all those people start using Cryptocurrencies, like Bitcoin, for their online and day-to-day transactions? They could skip the traditional banking system and directly buy and sell Bitcoin from their smartphones. If one third (or even less) of the world population starts to use Bitcoin, it will gain world-wide recognition and overtake any other currency.

The third scenario that could happen, is that a major economic collapse or abuse occurs. When this happens, lots of people will want to transfer their wealth to something that isn’t dependent on any country or government, but is universally accepted in every country of the world. There aren’t many options for such things. One of these things is, gold. And the other could be Bitcoin, which I see as the digital version of Gold.

I hope we will never have to experience such a catastrophic event in our lifetime, but it sure is a positive thing for Bitcoin, since lots of people will adopt it.

These are all the point I could think of. Thanks a lot for reading and have an awesome day! Visit me at flashipcrypto.com for more Crypto-article?