kaal:claim:3411110-003

Blockchain reduces counterparty credit risk through a specific mechanism: a single shared ledger compresses the settlement cycle so that cash or securities are verifiably in the account within seconds of the trade, leaving almost no window for counterparty default.

credit risk is reduced because cash (if selling) or the securities (if purchasing) are in the account for verification shortly after the trade (which could be seconds, if not fractions of a second), because the settlement cycle is substantially reduced.

Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019), III.1 Cost Reduction, p. 14
https://ssrn.com/abstract=3411110 · source PDF

Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110

• a single shared ledger used across trading firms
• near instantaneous settlement

mechanismsupport: arguedrisk-and-incentivesblockchain

• restated_by kaal:claim:3936876-034 Credit risk is low in digital asset transactions because the transactions are made instantaneously, which remo...

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