Composite assets rise: what is a great risk behind the stable currency and STO?

 Composite assets rise: what is a great risk behind the stable currency and STO?

The orange book (ID:chengpishu), the author: Caitlin Long, compiled: Leon, the daily planet authorized forwarding.

The encrypted currency and traditional financial products combine to form a new kind of composite assets, such as stable currency, bitcoin futures, ETF, STO, this trend has recently attracted the attention of many people. But many people ignore the huge risk of the assets behind the traditional financial settlement system: and the field of encryption is very different, very dangerous to cross.

Composite assets are divided into two kinds, the traditional encryption assets and traditional encryption assets.

The former includes stable currency and token of gold bullion. The assets look is encrypted but assets, anchor the traditional financial assets, such as the dollar and gold. This kind of assets issued in the blockchain, trading and settlement, but it is behind the underlying asset is issued in the traditional financial system, transaction and settlement.

The latter is in turn, such as bitcoin settlement ETF, futures, swaps, depository receipts or other derivatives assets based on encryption. It looks like the traditional assets, but the anchor is encryption assets, the issue of trade and settlement and the former is just the opposite.

Token securities and cash settlement bitcoin derivatives do not belong to the mixed type of assets, because their settlement process is completely in the single world, either traditional or encryption, there is no cross.

Token token of the securities and securities are very different, the former is pure encryption assets, the latter is the traditional encryption assets. Cash settlement encryption asset derivatives complete all traditional financial settlement in the world, do not touch the underlying encryption assets, and therefore will not risk into cross-border.

The traditional financial settlement system encryption and there are essential differences, this difference has far-reaching influence. Most Wall Street professionals do not understand the differences of the underlying system, they do not need to understand, every time a problem, specialized technical personnel always have the background of the problem will fix. I am also in compelling circumstances to study the settlement system, was to build insurance transfer system, the transaction amount is huge, the complexity of the settlement is also very high. This experience made me realize encryption than traditional asset settlement system superiority.

The bearer securities assets of this pure digital encryption, from the beginning of the design is to point to point, the total calculation, real-time settlement. Transaction encryption assets, buyers and sellers at the same time to complete the exchange value.

The traditional financial system completely opposite, consists of layers of intermediary, in net terms, delay.

This design is the traditional financial reasons. For example, the delay is to allow financial intermediaries to each other in the calculation of net to settlement. The net settlement is also so, it can minimize the liquidity and capital intermediary institutions must hold, even at the expense of consumers, but convenient intermediary.

According to the net value of the settlement, the buyer and the seller is not complete the real-time exchange of value, but the agency put the unsettled trades on it, until the time (such as one day) to all transactions in this period of time the settlement together. For example, in the securities industry, the broker will put all the clients buy and sell Apple stock within a day of all transactions is a net, a settlement, but not every transaction is a settlement.

The characteristics of the traditional financial settlement mechanism, the risk is counterparty risk and property books are not accurate. Counterparty risk refers to the party in breach of contract risk, in the above example, the broker is take your money, do not give you the apple stock.

The books will lead to inaccurate property Dole Food case (Wall Street accounting system created out of thin air 33% false Dole Food shares), and the problem of inaccurate proxy voting. The Achilles heel of the traditional settlement system is the traditional finance.

In the encryption of the financial world, counterparty risk is completely non-existent, point to point system is a natural delivery-versus-payment system.

This chart is summed up:

 Composite assets rise: what is a great risk behind the stable currency and STO?

The objective of the system encryption has a lower settlement risk, I think the different assets settlement risk ranking from low to high so:

The original encryption assets
The encryption type of traditional assets stable currency
The traditional asset
The traditional encryption assets

I will be in the second article in detail these assets in the end what is different, this article does not constitute investment advice.

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