# kaal:claim:3411110-003

**Claim.** 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.

**Type.** mechanism  **Support.** argued

**Holds when.**

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

**Source quote.**

> 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.

**From.** Wulf A. Kaal, Samuel Evans, *Blockchain-Based Securities Offerings* (2019), III.1 Cost Reduction, page 14

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

**Verify.** sha256 of source PDF `c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20and%20Evans%20-%202019%20-%20Blockchain-Based%20Securities%20Offerings.pdf

**Topics.** risk-and-incentives, blockchain

**Keywords.** counterparty-risk, credit-risk, settlement-cycle, shared-ledger, cost-reduction

**Related claims.**

- restated_by: https://wulfkaal.github.io/claims/3936876-034

**Canonical form.** This markdown file is the canonical hashed representation of the claim. Its sha256 is the content hash used for attestation.