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The mainstream media has become obsessed with crypto frenzy with the main focus on the bitcoin price. By treating cryptocurrencies as any other asset class or simply as a fashion, reporters miss the elephant in the room: the investment banks are about to start.

Nowadays, it is much easier to raise funds through an ICO than by the government. through traditional venture capital funds. As a result, there are already more than 1,500 cryptocurrences. A few years ago, it would have been unthinkable for a small business with a handful of employees to raise millions of dollars for the help of a simple white paper. Now, startups can do it with just an exciting concept and a white paper of a few dozen pages (sometimes less). Thanks to the ERC20 standard that uses the existing Ethereum Blockchain, anyone can launch a token at a limited cost without having to worry about building a Blockchain infrastructure out of thin air.

Obviously, Ethereum can be taken by another, more advanced platform. But for the moment, it makes more than 80% of the market. Of the 580 chips available, 475 are on the Ethereum block chain

<img alt=" Number of chips per platform "src =" http://cointelegraph.com/storage/uploads/view/6067d865dded09d53a5715414e2b12e1. png "title =" Number of chips per platform "/>

The genius of the Ethereum Blockchain made fundraising so incredibly easy: just create a smart contract to make an ICO The Ethereum tokens) are sent to the address of the contract, the contract issues newly minted tokens that are automatically returned to the shipper Wall Street should be terrified because Ethereum has just made redundant the banks. Investment

Wall Street, investment banks have served as intermediaries between asset managers and companies or governments who wish to raise debt (offer of investment). bonds) or equity ( IPO) was no way to get around them. Now there is. Banks have not yet started to feel the pain, but the venture capitalists have done it. Nowadays, it is not uncommon to see them in the list of pre-ICO investors (see the next ICO Telegram). VCs must adapt or be history, and Wall Street is next

<img alt=" Market capitalization of chips by platform "src =" http://cointelegraph.com/ storage / uploads / view / 553527c0bbd0d17978232636a82e5583.png "title =" Capitalization of Tokens by Platform "/>

Beyond the Uberization

Initially I I titled this article "The Uberization of Wall Street", but I realized that Uber What banks are already doing: linking supply (capital) to demand (investors) and taking a heavy toll in the middle Uber has simply upset a sector that had not evolved since it was invented where supply and demand were incredibly inefficiently connected Banks are already linking the supply and demand, but with Blockchain technology, they are no longer needed, at least not for what they do

How Ethereum Can Disrupt the Bond Market

Let's take a look at one of the most lucrative businesses on Wall Street: the issuance of 39, corporate bonds. Last year, companies around the world issued more than $ 3.5 billion of bonds. The way it works now is as follows: a company mandates an investment bank that will sell the bond to issue to pension funds and asset managers. Investment banks control this market because they have access to these fund managers. But as the ICO has successfully demonstrated, you no longer need such intermediaries, and companies could directly touch investors by issuing smart bonds. How could this work in practice?

The Issue

The V Company Creates a Smart Contract on the Ethereum Blockchain That Reproduces the Operation of a Link (Payment (19459016) Investors wishing to participate in the IBO (Initial Bond Offering) send ETH to the address of the contract and specify the lowest coupon that they are willing to receive Once the IBO completed, the smart contract automatically builds the backlog with investors wanting to accept the cheapest coupon first, the marginal investor needed to fill the order book setting the coupon for an obligation All investors who did not get the final order book automatically recover the ETH that they had sent to the smart contract. ]

Served this debt

Every six months, investors receive the coupon st) as defined in the original smart contract

If the Company V does not want to take the risk that the Ethereum value increases substantially, payments can be made in ETH but adjusted to the Ethereum exchange rate with the fiduciary currency of the bond. Before the coupon payment, the smart contract will get the exchange rate between the currency and Ethereum from an Oracle (data provider) and will pay the right amount of ETH so that the obligation replicate exactly how a monetary obligation would have behaved.

Otherwise, coupon payments and the return of capital may be made directly in tokens backed by a fiat currency and repayable with a recognized and audited financial institution.

2. At the end of the bond, the smart contract pays both the coupon and the principal (either the same amount of ETH or the same amount US dollars paid in ether or backed tokens) (19459008)

<img alt=" Mechanics of a Smart Link "src =" http://cointelegraph.com/storage/uploads/view/381c01a43705d70b5ee44745ccefb591.png "title = "Mechanics of a smart link" />

How many human actions Zero: the only thing to do is write the smart contract, but as with the ERC20 standard, you can expect standardized smart bond contracts to be available soon A smart bond deal would mitigate the risk of smart contract bugs

Huge potential for smart bonds

The current functioning of the mandatory market re avoids many investors. often requires $ 5,000 to $ 200,000, which means that many investors have no choice but to buy mutual funds or ETFs that include a basket of bonds. With a smart link, anyone could invest as little as $ 10 and get some of the deposit. Investors in the diaspora who wish to invest in their home country will be able to do so, small and medium-sized enterprises will have access to new financing options beyond what commercial banks can offer them and micro-bonds may also be issued. . The ICOs were only the beginning, the real disruption of the financial markets is yet to come.

Disclaimer: The opinions and interpretations in this article are those of the author and do not necessarily represent the views of Cointelegraph.com and the World Bank.