Arnon Dror | World Bank Plans to Issue Bond Using Blockchain
Arnon Dror: World’s First Blockchain Bond
Blockchain naysayers just got slapped with another reason as to why they might want to rethink their views about the emerging technology. Arnon Dror shares that no less than the World Bank has announced that they plan to issue the world’s first global bond using blockchain. For finance executive Arnon Dror, the move is a positive endorsement that legitimizes blockchain and its anticipated effects to traditional financial transactions. Image Source:CryptoNewZ
Bonds are a fixed income instrument where an investor loans money to an entity for a defined period of time at a variable or fixed interest rate. Generally, these entities are corporations or governments. Investors who loan money are commonly called debt holders or creditors. Contrary to popular belief, not all bonds are equal, as there is such a thing as junk bonds or bonds with a rating below BBB. By the same token, investment-grade rated bonds are safer and carry lower risk.
Reports say that the World Bank plans to raise as much as 100 million Australian dollars or 73 million dollars using blockchain. That’s no small money, explains Arnon Dror and the success of the bond issue will definitely be a step forward towards wider adoption of blockchain. Annually, the international financial institution issues $50 to $60 billion worth of bonds. For the blockchain bond, the World Bank has already tapped Commonwealth Bank of Australia to manage the bond. The move by the World Bank comes on the heels of German automaker Daimler who earlier issued bonds using the technology.
One of the reasons why the news has analysts buzzing is that blockchain has the potential to simplify or streamline the entire process of issuing bonds. Arnon Dror explains that despite the technological advancements the world has seen in recent years, there are some things that have yet to catch up, one of which is the issue of bonds. Believe it or not, the process is still heavily reliant on physical paperwork. Thus, blockchain offers an exciting solution that can speed up the process.
With blockchain, Arnon Dror explains that two parties can directly transact with one another, without the need for a third party to oversee or manage the transaction. Blockchain is the powerful technology behind Bitcoin or cryptocurrencies. Serving as a digital record that is transparent and unalterable, blockchain can revolutionize not only the record of financial transactions but ownership of records as well. This is because it eliminates the need for an administrator or in other words, blockchain decentralizes the system. Imagine being able to view records without permission. The transactions are open and the entire network is managed by everyone. This peer-to-peer network relies on a consensus to accept or change a new record as well.
Arnon Dror anticipates seeing more news like this in the future, especially if the World Bank’s bond issue turns out to be a successful one. The World Bank adds itself to a growing list of powerful, mainstream companies getting behind blockchain technology. It joins the likes of Facebook and IBM. Granted, both are tech companies, but their reach and influence on the world is worth watching.