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Revision as of 16:32, 25 June 2016
A smartbond is a specific type of an automated bond contract that uses the capabilities of blockchain databases that can operate as cryptographically-secure yet open and transparent general ledgers.[1] It is one of a class of financial instruments known as a smart contract.
A key benefit of the smartbond technology is the elimination of the "middle or back office", as well as the bond registry, substantially reducing the cost of servicing the bonds. Additional benefits include the potential for instantaneous settlement, rather than the days it required in 2015, as well as lower operational risk.[1]
But high costs are also present in the bitcoin blockchain and protocol that was being used in 2015: "Transactions can take an hour or more to verify and it requires large amounts of electricity via miners who verify transactions."[1]
History
As early as 2014, banking executives were speaking publicly about the ability of blockcahin technology to trigger significant "simplification of banking processes and cost structure."[2]
As of 2015[update], UBS was experimenting with smartbonds that use the bitcoin blockchain[3] in which "risk free interest rates and payment streams [could be] fully automated, creating a self-paying instrument."[4]
References
- ^ a b c Jenn, Sarah (2015-06-15). "UBS Bank to Launch Cryptosecurites Also?". NewsBTC. Retrieved 2016-05-27.
- ^ Irrera, Anna (2014-10-27). "UBS CIO: Blockchain Technology Can Massively Simplify Banking". Wall Street Journal. Retrieved 2016-05-27.
- ^ Ross, Rory (2015-09-12). "Smart Money: Blockchains Are the Future of the Internet". Newsweek. Retrieved 2016-05-27.
- ^ Wigan, David (2015-06-11). "Bitcoin technology will disrupt derivatives, says banker". IFR Asia. Retrieved 2016-05-27.