How to securitize assets with the help of crypto

22.03.2022
How to securitize assets with the help of crypto

Everyone knows about blockchain and crypto now, but many forget about the purpose, for which they were created in the first place. Bitcoin, the first of the cryptocurrencies presented, was created after the crisis occurred in 2008, which greatly influenced the economics and left many people without their savings. That case vividly showed how unstable the financial industry can be, therefore requiring a tool for storing or obtaining certain fund that could not be influenced by traditional stock market.

That is why nowadays more and more people become interested in crypto sphere, even after hearing about its high volatility issues. There are lots of perspectives that cannot be ignored, and so, despite of possible risks, many will to try out and keep their assets in the neutral space.

The main advantages of blockchain technologies

During more than decade of blockchain’s existence, it developed into a powerful mechanism that ensures maximal comfort of processing transactions and storing within the network the funds entrusted by user. With lower costs of equal range, high transferring speed allowing to receive results after a second or even less, security established for protecting any incoming and outcoming data together with transparency and opportunity for benefitting from such kind of storing crypto sphere has gradually collected its current reputation. When placing the assets, there will be no need in worry for the safety neither from the point of fraudulence nor from the financial perspective.

If the blockchain technology were to be integrated into every branch of business, there would be less need in asking lawyers for assistance in drawing up the contracts between customers and businesses, even on the level of business-to-business relationships. The already existing concept of smart contracts presents an opportunity of setting the conditions for guaranteed accomplishing and receiving reward only after submission of those, with ability of correcting and negotiating during the process. Such mechanism also becomes a great example of securitizing assets before getting the desired result from another participant.

 

Possible drawbacks that may hold one back

  • Adaption to the workload. Not every system of blockchain is adapted for carrying really high load of transactions happening simultaneously – comparatively limited amount of blockchains, like Polkadot, for example, create parachained kind of system for expanding information transfer opportunities.
  • Questionable legal status. Not every country is still ready to accept crypto in general, even more – as the leading payment method for common products. Surely, many progresses are launched for crypto integration into daily routine, but it will still take a lot of time for cryptocurrencies to be easily applied.
  • High environmental damage. Not every blockchain is enough adapted for taking into consideration ecological condition, having proof-of-work consensus as a base which takes a lot of resources to be put into action. Though, the situation is slowly being resolved by other algorithms applied, the cryptoindustry is still not regulated enough for it.

As emerging sphere of interest, crypto has not yet gained enough experience in working with it, so there are possible issues that should be considered and taken into account both by common users or possible businesses invested into this idea. But, when they will finally be solved, the perspectives will definitely worth the efforts put in development.

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