A Discussion On The World Bank's Blockchain-Based Bonds

The World Bank Is Launching Bonds

It is said that some of the most important and influential financial institutions worldwide may be looking to further integrate blockchain technology into their offerings whereas a report by Coin Telegraph is all set highlighting how the World Bank has now ordered the creation of that blockchain-based bond. This new bond will be created through Australia’s Commonwealth Bank and below we take a look at what these bonds might be and how they could impact the mainstream investment world. 

Bond-i

Hereafter the new bonds called bond-i referring to as the first global bond to use distributed ledger technology according to a Twitter announcement by the World Bank. Here Bond-i is short for Blockchain Offered New Debt Instrument, as the bond will surely be issued by the World Bank in Washington. Finally, thereby the report comes that, the particular bond was designed as well as developed by the CBA Innovation Lab’s Blockchain Centre for Excellence as it’s not immediately clear why the World Bank selected CBA as the developer of the new blockchain-based bond as it may be related to the fact that the CBA innovation lab had previously tested a prototype blockchain bond as a partnership with the Queensland Treasury. 

Therefore it is important to note that bond-i is likely the first bond issued through blockchain as it is not the first deb instrument to do so. It was previously the Spanish banking group BBVA which signed a $ 117 million blockchain-based loan. 

The Ethereum Blockchain To Be Integral

Reportedly a private Ethereum blockchain is set up to allow for the management of bonds. It is here that this Blockchain network will also create bond-i products which are according to Coin Telegraph the platform that has been reviewed by Microsoft to ensure that architecture, security, and functionality are solid. Then it was by partnering with the CBA development team with an unnamed law firm that to plan for the issuance of bonds and to develop the smart contracts which will govern bond-i products. 

Hereafter independent blockchain developer Matthew Di Ferrante who was previously working for the Ethereum Foundation indicated that the move is a good first example of how blockchain can be integrated into the bond world. Adding to it he says that financial instruments like bonds are easily ported to blockchain /smart contracts, whereas it’s not the be-all and end-all even for mainstream financial institutions. It is therefore the real usefulness coming when many different institutions and industries are all using compatible blockchain. 

What Are The Implications Of The Project

Subsequently while the bonds issued as part of this project may be fairly standard, the implications of the project are not. Here it is firstly there is the question of decentralization as for much of the cryptocurrency and blockchain industries, decentralization is a crucial and central tenet, necessarily a private Blockchain with the World Bank co-managing it not nearly as decentralized as many blockchain projects are.

It was observed furthermore, that as this new bond project is been harnessing blockchain technology for the management, creation, and oversight, it is so far essentially entirely unrelated to cryptocurrency. It is then that some might see this as a way of confirmation that the mainstream financial institutions are happy to separate cryptocurrencies from blockchain technology preferring to only utilize that is the latter as they ignore what the former was 

Later on, as it was observed that the World Bank’s plan is not for the first time the majority of financial institutions have looked toward blockchain technology in various ways where it does have the potential to influence other institutions that may have previously been hesitant. Thereby Martin Ethereide of the Bank of England’s Fintech Division, for example, explained that this organization is aware that in a distributed system, therefore, there are the potentials for resilience and other benefits distributed payment systems adding that this blockchain is something that we want to make sure they are aware of going forward, which is undoubtedly the success or failure of the bond-i program that will impact other financial institutions decision to explore this space as well. 

Finally, Why Go For Blockchain Technology

The security offered by the blockchain technology is one among the many reasons as to why the institutions are opting out for it. Here we see that the financial institutions are mainly targeting decentralized systems to store their cryptocurrencies. Hence the huge growth in demand for the application of blockchain technology. Hereafter the users have identified a robust technology underlying the project that is based on blockchain technology. So this discussion comes up with the reasons behind the use of a decentralized ledger where the coins are kept safe and secure. Later on, we bring you more news related to this.