Private-Blockchain role in preventing a financial D-day
As you all know, the entire financial industry is in the process of anchoring itself to a Blockchain . Each private Blockchain is in fact a dormant Altcoin to be activated once called for. These Altcoins may first act as some exotic financial instrument which most likely will not be named a coin, however it will have all the characteristics required for it to be a currency.
The thing that the banks will do will look a lot like restructuring a loan but it will in fact turn your dollar debts into their own asset debts. A bank will simply “sell” you your own debts by offering you a loan using their own assets. Or in securities terms, they will buy your “private bonds” which are denominated in that bank’s own currency (altcoins).
Debts in our economy are structured as commodity. financial institutions are allowed to sell, buy and trade debts.
When a bank gives you a loan to buy a house you spend these dollars to pay for the house. You now have a contract with the bank to pay back the dollars you took plus interest. Now remember that this money is money you are required to pay back to the banks, and they are the ones having to acccept it as a payment. That may seem so trivial but in fact all the magic is in that simple paradigm. In fact the banks are now the owner of your debts and they can decide what to do with it. They can keep it, sell it or even forgive it. But now they can also do something entirely different. something that have the power to change everything we know about markets and economy, something that in general is named a blockchain based assets
Now I want to show you how banks will be able to use the blockchain in order to create instant value to their newly created blockchain based assets. Remember that the banks own your debts. they do not have dollars in their hands only your obligation to pay these dollars. Thus it will be very useful for our discussion here to think of that debts as a sort of a security or even as “private” bond, since it is easy to view a bonds as an assets. But unlike bonds the face value of these “private loan” is being payed incrementally all along until expired once the loan is payed off.
A government bond is a bond issued by a national government, generally with a promise to pay periodic interest payments and to repay the face value on the maturity date. Government bonds are usually denominated in the country’s own currency.
Note that bonds are denominated in some currency. Your loan is also denominated in the currency you took it as a loan. Of course that seems obvious however this is exactly the point in which banks will be able to turn their blockchain based assets into a value equal or greater than the dollar .
The thing that the banks will do will look a lot like restructuring a loan but it will in fact turn your dollar debts into their own asset (altcoin)debts. A bank will simply “sell” you your own dollar debts by offering you a loan using their own assets. Or in securities terms, they will buy your “private bonds” which are denominated in that bank’s own currency (altcoins).
So now nothing really change in the outside world. the balance book stay the same only that every month instead of having you pay the dollars, they charge you their altcoin and pay the dollars owed on your original loan
Now remember that none of these Altcoins you took as a loan actually entered the market at that points. You never actualy got them since you have used them when the bank had you buy your old debts with it. So now in order to get the coins you need to use to in order to make your payment you need to buy them using the dollars you earned at work. And now you create the demand for that new Altcoin. A demand which its lowest margin can be calculated precisely and thus can start play a very important role as a financial instrument for investment.
One more important thing to bear in mind. The loan denominated in the bank’s altcoin will have to be pegged to the dollar in order to be appealing to borrowers. however the altcoin value fluctuate in the market according to a target set by the issuer as long as they themselves act according to that preset target.
How should a free market of Altcoin will behave is a topic of itself. a very important one since the rules of the market now are governed by the paradigm of nation based fiat money monopoly.