Financial products which are based on cryptocurrencies have been increasing by the day. In the latest development, an Ether-based bond was launched by Nivaura. The bond offering is built with the guidance of Britain’s Financial Conduct Authority. It has been designed in such a way that LuxDeco a startup based out of London would be able to use it to raise short-term working capital.
The main development in this bond is that it would be settled through the Ethereum blockchain. This would be the first instance of a bond settling with the help of blockchain and through cryptocurrency. The life cycle of the bond is pretty short and it is only one week. However, it will serve as a test case for future such offerings.
The bond will be issued by luxury goods dealer LuxDeco. According to the CEO of LuxDeco, Jonathan Holmes, the main aim of launching this bond is to bring some innovation and a new application to the blockchain space. Depending on the success of this bond issue, the company is planning to launch further issues in the future as well.
The company Nivaura which is helping the client launch this bond issue is positive that once this bond issue goes through successfully, more businesses would be interested in launching such issues based on cryptocurrencies. This would be another application of cryptocurrency for regular businesses.
J.P.Morgan has also developed such a bond which can be used by a variety of different asset classes. Moreover, it has aligned that bond issue with its own systems as well.
With the companies increasing the integration of the traditional businesses as well as capital raising mechanisms with blockchain, one thing is for sure that the applications of cryptocurrencies, as well as blockchain technology are significantly increasing. The integration of the blockchain technology with the real-world businesses is also increasing. This would in turn help businesses utilize the rising popularity of cryptocurrencies in order to raise the capital as well as benefit from the rising price of the cryptocurrencies. Once, it becomes a norm to raise the short-term capital through the cryptocurrency bonds, offline businesses would be able to find a lot of potential in raising capital through this route.
Tugba Kaplan - Tech Journalist
Tugba Kaplan is a journalist with more than 8 years of experience. She is an award winning correspondent. She has worked for Article 19 / The Guardian Foundation/ P24 Knowledge Right Project. She has participated in See Media Observatory in Macedonia. She was Research Fellow at Friedrich Ebert Foundation in Germany.