Blockchain technology is going mainstream.
The World Bank is set to sell a bond using blockchain technology, a move that is likely to speed up wider adoption of distributed ledger technology, analysts say.
The Washington, DC–based lender chose Commonwealth Bank of Australia (CBA) to manage the sale of the aptly named bond-i, an acronym for blockchain-operated new debt instrument. In a statement, the World Bank described investor interest as strong.
Unconfirmed reports suggest the sale could raise between AUD$50 to $100 million ($73 million), a still relatively modest amount compared to the $50 to $60 billion the World Bank issues annually in bonds for sustainable development.
But the development is nonetheless groundbreaking. The World Bank claims it is the first bond globally to be created, allocated, transferred and managed through its life cycle using distributed ledger, or blockchain, technology. “We believe that emerging technologies offer transformative yet prudent possibilities for us to continue to innovate, respond to investor needs and strengthen markets,” stated Arunma Oteh, the World Bank’s treasurer and vice president.
The World Bank and CBA expect to launch the bond-i following a period of consultation with a broader set of investors. World Bank infrastructure for the bond will be run from Washington on Microsoft’s Azure cloud-computing platform. In an attempt to allay doubts over the technology, Microsoft says it has ensured the system’s operational capabilities, security and scale.
The blockchain platform is the underlying technology supporting cryptocurrencies such as Bitcoin and Ethereum.
Critics of the platform claim frauds perpetrated against some cryptocurrencies prove blockchain technology is not unassailable. Nevertheless, blockchain’s capacity to streamline processes among debt capital-market intermediaries and agents has disrupted financial markets attracted by the cost effectiveness of real-time transactions.
Meanwhile, several central banks are said to be mulling minting their own digital currencies in what could be a major realignment of the international monetary system.