Despite the prolonged downturn in the cryptocurrency market, conventional businesses are still researching the potential benefits of blockchain technology. The World Bank recently announced that their first blockchain managed bond exceeded expectations. Settled through Australia’s Commonwealth Bank, the bond raised a total of $81 million USD prior to the upcoming settlement period.
The bond is one of the first developments to come out of the World Bank’s Blockchain Innovation Lab – and shows a continued interest in distributed ledger technology. A tentative first step, the bond will allow financial institutions to properly learn the intricacies of blockchain technology. Dubbed the blockchain operated new debt instrument or ‘Bond-i’ for short, the two-year bond offers public investors a chance to get involved with the new technology.
Blockchain-Operated New Debt Instrument
The bond itself uses blockchain technology in the expected manner. Distributed ledgers allow for the easy creation, distribution and management of financial instruments – in most cases cryptocurrency. However, they are fully capable of powering more traditional investments, as the World Bank is proving through their Bond-i program. In determining what back-end blockchain technology to use, they settled upon a private Ethereum blockchain. Their reasoning for this decision being that Ethereum has one of the most active development ecosystems in the industry. The World Bank’s Blockchain Innovation Lab remains open to other options, with Ethereum serving only as a test bed for the Bond-i system.
The World Bank itself is a global financial institution focused on providing capital to nations. This includes major infrastructure projects – with an aim to reduce poverty on a global level. Alongside local partners, the World Bank works to spur economic growth through investment in health care, education and basic needs.
Blockchain vs. Cryptocurrency
Blockchain and cryptocurrency are inexorably linked in the minds of many investors. However, blockchain itself may hold more promise for widespread adoption if it is uncoupled from cryptocurrency. Distributed ledger technology can provide great benefits to systems that properly leverage it. The automation and trust-less nature can cut down on overhead in a variety of ways.
This is not to say that cryptocurrency does not have a place in the traditional financial sector. Industry giant Ripple has made great inroads through their product suite – which now powers the back-end networks and liquidity pools of several major banks and investment firms. The cryptocurrency industry that emerges from the current bear market may look much different than the one that went in – but blockchain will remain the keystone and the most promising technological aspect.
Article By: Adam Stone