Big Picture Blockchain News Business Digital Economy

Digital Format of Economy — Prospects for Development

One quarter of all actions performed by a modern person is carried out by means of high technologies. The Internet of Things (IoT) concept is no longer just an idea; it is being dynamically implemented. The number of “things” connected to the Internet and equipped with sensors for information transfer increases every day. Standards for transferring data from devices to a single virtual network are being developed; personal data security and integrity issues are being solved. The development trend for the next few years is going to be the process of adapting production to digital technologies — the industrial revolution known as “Industry 4.0”.

According to the results of the study “IT Transformation Maturity Curve” conducted by Enterprise Strategy Group (ESG) in late 2017, based on the answers of 4,000 CEOs of the global IT companies in the USA, Great Britain, Germany, China, Japan and other countries, the main competitive advantage is digitalization of business. Due to the development of computer networks, acceleration of transport connections, modernization of communication means and information dissemination channels, territorial boundaries are erased; time gains ground as one of the most important resources and becomes a key evaluation criterion when making decisions. Such evolutionary processes as digitalization of information and application of technologies of decentralized data ledgers to store information have also influenced the global financial system.

What Does It Mean?

Financial turnover of the majority of leading companies cannot stay within the economy of one state, and this leads to the creation of transnational financial, industrial and social networks. New economic unions are formed, new markets open up, certain financial operations become part of the global internet network and form a new concept — digital economy.

The technological progress of society and business leads to structural changes at all levels, including the government level. At first, technologies and services emerge, which satisfy needs of business and society, then they obtain legal recognition and undergo legislative regulation. For example, the first crypto currency emerged in 2009, but issues related to its legal status and official recognition by government institutions were extensively discussed only during the past year and a half. During the World Economic Forum 2017 in Davos, there was little discussion of crypto issues and possibilities of using Blockchain, but the same Forum that took place in January 2018 could rightly be called fateful for the crypto industry. Projects implemented by means of the Blockchain technologies already account for 1% of global economy. Development trends of digital economy are no longer simply trends, the global business community initiates and actively implements projects related to digitalization of its assets.

How Does Digitalization of Real Assets Promote Economic Development?

Digital economy is aimed at satisfying customers’ needs; thus, digitalization has started first in the field related to consumption of goods and services. More and more financial transactions are carried out by bank transfers. Online shopping, systems for instant payment for goods and services, electronic queue management systems for receiving administrative services have become commonplace for an average resident of any modern developed country.

A significant advantage of digital assets over physical ones lies in simplicity of their use. For example, in order to take out a loan or pay for a large purchase through a bank, a customer has to fill in and sign a package of documents, and if someone wants to carry out a transaction through financial institutions, they will be charged a fee. In addition, international financial transactions conducted through banks can take from a few days to a week. This occurs due to differences in procedures and rules for interaction between a bank and a customer in different countries.

Modern Blockchain technologies are able to solve or minimize problems related to a long chain of intermediaries comprising brokers, banks and lawyers. The period of transaction execution by means of a distributed data ledger is reduced to a few minutes or even seconds, and security of transactions is ensured by the Blockchain self-verifying algorithm, which excludes the possibility of modifying or removing data contained in the Blockchain.

Ways of Applying the Blockchain Technologies in the Segment of Real Economy

After almost ten years of the Blockchain existence, its potential has not yet been fully explored. The distributed ledger databases are already widely applied in the field of copyright, operations involving goods and raw materials, power industry and electronic voting, but the financial sector still remains the main platform for functioning of the Blockchain technologies. Leading global banks actively test digital databases in order to gradually automate all financial processes, which will allow relieving the system and increasing the level of trust. When carrying out any operations by means of a distributed ledger, customers can be certain that the information they provide will be received by a specific individual.

Modern digital platform technologies allow raising financing for projects and investing in startup companies. The Bitbon System is one of such platforms developed on the basis of a separate version of the Ethereum Blockchain, but with additional tools and utilities. The Blockchain modification allowed achieving the network performance of up to 1,000 transactions per second and attracting financing for business projects and startup companies by means of such type of activity in the Bitbon System as Contributing.

How Does It Work?

Any activity in the Bitbon System is conducted in a legal field. All its participants have to go through a mandatory verification procedure according to the established rules of the Bitbon System. Contributing means an original investment model within the Bitbon System by means of Blockchain and smart contract technology. Participants of the Contributing process include: Bitup-Agency, Contributor and Contractat. All participants act according to the terms and conditions of a digital document — Bitbon Public Contract of a specific project. This document contains information about the business offer and establishes all rights and obligations of the parties. The Public Contract is considered to be completed when the business plan is fully implemented, and the Contributor receives his/her financial gain according to the terms and conditions stipulated in the Bitbon Public Contract. A smart contract algorithm controls the fulfillment of obligations and conditions and completely excludes the risks resulting from the human factor.

The Bitbon Public Contract contains detailed information on the business project and a reference to the procedure for evaluating assets of the entrepreneur (Contractat), which constitute the basis for the Bitbon backing. All data is digitized and recorded in the Blockchain. As a rule, during classic crowdfunding and ICOs, short-term projects with limited access to foreign capital are usually chosen for financing. In addition, in order to participate in such business projects, one needs certain knowledge, sufficient experience and time. Investors have to rely on themselves to identify the sustainability and profitability of a project, payback period and possible risks. According to the statistics of the European rating agencies, more than 40% of ICO projects do not have a final product — this is one of the reasons why the level of attracted funds has decreased from $6.1 billion in 2017 to $3.3 billion in the first quarter of 2018.

In the Bitbon System, each project is evaluated by the Bitup-Agency and only then can be admitted to the IBO (Initial Business Offering), which is a fundraising process for its implementation. The IBO process starts as soon as the Bitbon Public Contract of a specific project is placed on the exchange. Preliminary evaluation, rating system and subsequent expenditure control of funds collected by the Contractat during all stages of Contributing make it easier for the Contributor (investor) to identify promising business offers. Another advantage of digital investment is minimization of transaction costs due to the absence of intermediaries between the Contributor and the implemented business project during the Contributing process.

Features of the Bitbon System Economic Model

The main advantage of Internet platforms is their availability to any person and absence of any time limits and territorial restrictions. This is why Simcord Company used the philosophy of openness and publicity when developing the Bitbon System. Full decentralization and application of liquid instruments for attracting financing and managing assets are the fundamental principle laid down in the Bitbon System.

Anybody can become a Bitbon System Participant. For example, you have a land plot and a business idea, but no initial capital to implement the project. The Bitup-Agency will conduct the audit and evaluate the land plot (assets), the cost of which will become the basis for backing the business idea behind the Bitbon Public Contract. As a financial instrument and a key component of the System, Bitbon allows determining the value of any property and essentially possesses the features of a crypto asset.

The principles laid down in the digital economic model of the Bitbon System ensure a long-term demand for Bitbons, that is, a constant cyclic turnover. By investing Bitbons in a project, the Contributor receives a certain amount of Projectbons, which reflects his/her share in the project or business. The Contributor’s share in the Contractat’s business ensures a constant demand for Bitbons under the Bitbon Public Contract. In order to implement his/her business idea, the entrepreneur receives Bitbons from Contributors and sells them for fiat money on the exchange. The Contractat must exchange the profit received from the business project implementation for Bitbons in order to fulfill his/her obligations under the Bitbon Public Contract and pay out profits to Contributors. Thus, the natural offer and demand for Bitbons is created under the influence of market mechanisms.

The Bitbon System users and participants will eventually form a smart community that will maintain the effectiveness of the System functioning. The Bitbon System operators are responsible for organizing interaction between all participants and providing free access to the single digital space. At the moment, Simcord Company is the first Bitbon System operator. In the future, any commercial company will be able to obtain the status of a Bitbon System operator. As soon as the required number of operators is achieved, the Bitbon System will become fully decentralized, and the Bitbon System users will receive all managerial responsibilities. Such an approach will continue to contribute to the smooth functioning of the Bitbon System because it will not depend on any administrative authority.

Prospects

Observing the development of the global community, we can say with full confidence that half of all business investments will be conducted in digital form in the near future. It is an objective process of the global Internet economy. Banks of Switzerland, which is one of the leading global financial centers, already work closely with the Blockchain and crypto currency startup companies. The range of provided services includes: crypto asset management, cold storage of crypto currencies and opening accounts by crypto companies. It should be noted that, thus far, only two companies have managed to undergo an important procedure for compliance with the rules of the KYC Policy (“Know Your Customer”).

Popularization of the Blockchain technology creates the concept of decentralization and publicity; priority tasks for developers include finding solutions to the issues of scaling and functioning of Blockchain platforms in a legal field. With the sound approach to regulation of decentralized ledgers, digital economy may become a worthy alternative to the economy of real assets. The economic model and technical solutions of the Bitbon System are a good example of how the potential of the Blockchain technology can change people’s general idea of business practices at any scale.

Related posts

BlockchainUA Conference To Attract More Than 1K Attendees

The Fintech Times

Liberis Provides £1million Funding to UK SMEs

thefintechtimes

FCA Retirement Outcomes Review should embrace more innovation and maximise the use of Fintech

thefintechtimes
Get news