Altcoins Talks - Cryptocurrency Forum
Learning & News => News related to Crypto => Articles about Cryptocurrency => Topic started by: Goodcat49 on June 18, 2018, 01:55:44 PM
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Risk hedging tools are important in investment to stabilize the market from irrational fluctuations in the current turbulent world of finance. Financial derivatives like insurance, futures, options and forecast services, with an annual size of $50 trillion, have become quite significant in global risk management.
The current risk management system, however, being dependent on centralized information structure, is flawed in many ways. First, there is a lack of trading varieties and especially creative ones while the introduction of new varieties requires a myriad of approvals, raising the overall cost and undermining its capability to adapt to the fast-changing market. Second, the contracts are executed inefficiently as business clearing and futures contracts delivery involve much manual operation and thus operational risks. Third, OTC financial derivatives market is not transparent and credible in its valuation method as it calculates its risks with the internal models of financial institutions.
For Risk Management, You Need ValPromise
The good news is that blockchain technology, constantly evolving and ever more mature in recent years, is about to revolutionize risk management.
Blockchain is technically sharing ledger. Distributed with whole network records, efficient with low costs, safe and reliable, it is a perfect fit for risk management as it lowers regulation costs, reduces transaction risks and complexities, improves information credulity and supervision transparency, and executes the procedures jointly.
ValPromise, for example, is creative application of blockchain in risk management. ValPromise is designed as a blockchain-based release and trading system for distributed value promise protocol, in an effort to manage global risks variety-wise and region-wise. Its investors include Shen Bo from Fenbushi Capital, Wang Lijie from PreAngel Fund, Zhou Chaohui, VP of Dogecoin Foundation China (DFC), Gravity Venture Capital, Wenzhou Capital, the Crypto Venture, MDT Foundation and Alpha Connect Investments, among others.
ValPromise, derived from the deep integration of blockchain and finance, is likely to create a free and transparent financial products market, or a finance protocol-like exchange where all financial contracts related with public indicators (weather, commodity price, foreign exchange, stock index) can be released and traded with no conditions attached.
When materialized, ValPromise will cater to a huge user group with such needs. Users normally consist of issuers (financial professionals or research institutes experiment on innovative financial products) and traders (individuals or companies with investment needs) in a financial contract. The decentralization, transparency and traceability of blockchain allows ValPromise to build a trustworthy bridge between the two parties, and to have the contracts executed in such conditions. The process is supported by encryption, Hash algorithm and consensus mechanism with details of each contract searchable and traceable in the specialized blockchain browser.
ValPromise stores all shareholders’ data (identity, contract and transaction information) in a decentralized structure of block and chain, clearing the way for point-to-point issuing of financial products and saving the need for reviewing. As a result, issuers and traders can interact directly, improving efficiency greatly, reducing unnecessary costs from agencies as well as lowering operational risks, intentional or not.
ValPromise will also provide a better solution to defaults and overdue execution that haunt traders with regard to conventional centralized financial products. When establishing a contract, ValPromise locks down enough VPP tokens. At due time, smart contract technology, which is programmable, will make the decisions automatically in accordance with the stated indicators and date, thus eliminating the risk of default from both sides without endorsement of any third party.
Read the details in the article of Coinidol dot com, the world blockchain news outlet: https://coinidol.com/valpromise-possible-game-changer-in-financial-market/
(https://coinidol.com/upload/resize_cache/iblock/c95/900_900_1/c95ef757952430424220a499df489ef2.jpg)